As Chinese traditional villages are receiving increasing attention from the country, society and business in terms of sustainable tourism development, their residents’ perceptions have not been thoroughly investigated. To contribute to the literature, this qualitative study, which was based on stakeholder theory, conducted semi-structured in-depth interviews with 12 different stakeholders in Hongcun, one of the most well-known traditional villages in China. Using grounded theory approach, this study found that residents’ perceptions and attitudes of sustainable development differed in four main areas—economic, environmental, social, and cultural—and several sub-themes were developed to influence these four areas. The study results have important theoretical and practical implications for current sustainable tourism development in traditional villages. In particular, these results have substantial value for the country, society, and business levels with respect to developing traditional village sustainable tourism based on the perceptions and attitudes of the residents.