Once abandoned for more than three decades, vernacular settlements in Oman are now being progressively reinvested in to foster the country’s heritage tourism sector. The present research focuses on the emerging phenomenon of community-led initiatives for vernacular heritage rehabilitation and adaptive reuse in Oman. Through an examination of three case studies, its aim is to describe this process and its modes of action and discuss its effects on vernacular settlement transformations. A mixed research methodology was designed to include (A) analyses of relevant primary and secondary data, (B) documented onsite observations, (C) interviews with local community representatives and key players in the operations of rehabilitation, and (D) extractions and analyses of quantitative data from a hotel booking website.The research sheds light on unsuspected interrelations within and between the projects being implemented in these settlements and their operating modes. It reveals the focal role of a local community in a kind of ‘bottom-up’ management of its built heritage, coupled with a ‘horizontal cooperation’ between the three initiatives studied in this research. Moreover, it shows that a heavily centralised and top-down policy for the field of heritage conservation and management is among the main obstacles that hinder such initiatives. Furthermore, community-led operations of vernacular heritage rehabilitation are being undertaken under insufficient regulations in terms of land use, building restoration and adaptive reuse. In this context, the paper discusses some of the serious threats and concerns faced by such initiatives and proposes actionable solutions to mitigate these hindrances.