Definition of island in the world and Croatian literature has numerous of definition that indicates that the island as part of land is surrounded by water (sea, lake, river). According to the UN Convention on the Territorial Sea and the Contiguous Zone of 1958, the island was "... naturally formed area of land surrounded by water which is above water for the highest tide." . The island is made of the same land as all the land on the continent but the elements are different. The island ecosystem is poorer than ecosystems on land. Also it can be much easier to disorder the ecosystem in the island and it takes more time for island to recover in comparison with the land. Many islands in Croatia are faced with developmental challenges and difficulties due to isolation, unfavorably structured island economy, dependence on external inputs, lack of public infrastructure and public services and for unbalanced exploitation of natural resources. The most profitable activities are often subject to excessive exploitation and cause problems in terms of environmental, social and cultural vulnerability of the systems, creating the need for control and diversification of development activities The paper is analyzing the island of Rab; its demographic, population and economic impact on sustainable development of the island. The analysis also include of the options of how could the European Union assist in keeping the island sustainability in balance.