Tourism in remote Outback Australia has experienced severe decline since the late 1990s. Outback destinations have generally failed to recognize the need to adapt to changing market trends and diversify their visitor markets. To remain competitive in the marketplace, it is argued that Outback destinations need to be able to operate as tourism innovation systems that engage the whole destination system in processes of collective change. This paper analyses the case of the Flinders Ranges, a remote destination in South Australia. It documents the strategies that the regional tourism system has used to diversify its market base and identifies the factors that have allowed the system to develop internal systems-of-innovation dynamics. The findings suggest that the Flinders Ranges tourism system has been able to overcome internal structural weaknesses by the 'import' of externally trained entrepreneurs and public sector leaders. The paper finally questions the role of centralized state and regional tourism organizations that seem to have stifling effects on innovation capacities in remote destinations.