This paper examines a transformative tourism case study driven by local entrepreneurship in the coastal and post-violence/peripheral village of Zumaia, in the Basque Country (Spain). This paper aims at addressing an innovative methodology called ‘Tourism Living Lab through Multistakeholders’ Penta Helix framework’ in response to a globalised trend of increasing visitors. The result shows democratic tourism policy-making practices at the local level, including (i) a participatory strategic formulation process (ii) by fostering a local entrepreneurial ecosystem to overcome ‘tourism-phobia’ (iii) while renewing local identity (iv) through bridging social capital for a new post-violence era in the Basque Country. Article DOI: 10.1111/rsp3.12130