This study, grounded in Butler’s Tourism Area Life Cycle model, investigates the life cycle of the Balaton Sound music festival, with specific emphasis on its developmental trajectory, peak period, and subsequent decline. The analysis provides a structured framework for examining the evolution of the festival across six distinct stages and assessing its regional impacts. The research employs a mixed-methods approach. The qualitative component explores the festival’s life cycle stages, its social impacts on the local community, community responses, and shifts in the festival’s public image. The quantitative analysis includes data on visitor numbers, guest nights, and changes in the Gini index during festival periods. Findings indicate that the festival reached its zenith in the mid-2010s, characterized by both high tourism significance and elevated social prestige. The decline, however, was primarily triggered by the COVID-19 pandemic, shifts in consumer preferences, and declining perceived value, all of which diminished the overall festival experience. The study concludes that although Balaton Sound played a crucial role in shaping summer tourism in the region for over a decade, recent economic, environmental, and social challenges led to its discontinuation and the restructuring of Zamárdi’s tourism economy. The results are utilizable for DMOs and other industry stakeholders.