Supernatural folktales have a long oral tradition in Scotland, embedded in local communities and the landscapes of the region. Recently, these folktales have been utilised by destinations as a form of place-making, and a driver for increasing tourist numbers and engagement. Drawing on a critical discussion of the literature, and case study examples from the Isle of Skye and Orkney Isles, this paper examines the challenges and opportunities of folklore tourism. It argues that while folklore tourism presents opportunities to increase tourism-based revenue, and for the preservation and dissemination of intangible heritage, it poses challenges to the authenticity and identity of local communities, and integrity of the natural environment. The experience cultivated by supernatural folktales may, however, also present opportunities to connect visitors with landscape and community through encouraging participation in liminal and enchanted spaces. By critically exploring the tourist gaze in relation to folklore, this paper invites further research into the value of developing a folklore-centric gaze through the perspectives of animism, and a heritage-centric approach. It is proposed that a folklore-centric gaze may engender a relational approach to landscape, folklore and tourism, and aid in the development of sustainable forms of folklore tourism for the future.