As a novel approach to urban planning, integrated urban tourism development necessitates adequate institutional capacities to manage complexities and foster coordination across various sectors. Aimed at conceptually analyzing the role of institutional capacity in realizing integrated urban tourism development, this paper examines the dimensions, barriers, and strategies for strengthening this capacity. Institutional capacity is defined as the ability of institutions to mobilize resources, adapt to emerging conditions, and coordinate diverse actors to resolve public issues. The findings indicate that institutional capacity comprises legal-regulatory, normative, and cultural-cognitive dimensions, each playing a pivotal role in the success of integrated urban tourism development initiatives. Furthermore, drawing upon Healey’s framework, complementary dimensions—namely knowledge resources, relational resources, and mobilization capacity—are identified. Numerous barriers impede the enhancement of institutional capacity, including sectoral fragmentation, weak inter-institutional coordination, a lack of sustained political will, and human and financial resource constraints. To overcome these obstacles, strategies such as capacity building through institutional experimentation, the establishment of horizontal structures, inter-institutional networking, and policy learning are proposed. Finally, an integrated conceptual framework is presented for analyzing and strengthening institutional capacity to facilitate integrated urban tourism development.