Traveller cafes have played an important role in the development of backpacker enclaves in Vietnam, providing a network and infrastructure used by independent travellers. Yet, there is little known about how these enclaves evolved, who established and ran these businesses, their motivation, skills, finances and the entrepreneurial culture and climate in which they developed. This paper examines the emergence of small-scale tour operators and the development of their traveller cafes in the emerging tourist destinations of Hanoi and Ho Chi Minh City in Vietnam. Situated within the context of a transitional economy, this paper explores the development trajectory of these entrepreneurs who established small private businesses throughout the 1990s to cater to a burgeoning number of mainly western backpacking travellers. Drawing on in-depth interviews with these traveller café entrepreneurs over an eight-year period, the paper explores the impact of a range of internal and external factors in influencing the development of the traveller cafes. These factors include the role of backpackers in shaping the services provided, government regulation of private entrepreneurs in the context of a transitional economy and the role of historical and regional factors. The findings demonstrate a differentiation in the development and operation of cafes in the north and south of Vietnam. The paper argues that the development of backpacker enclaves in Vietnam are context-specific and that the country's socialist legacy and its complex transitional environment has shaped the way in which traveller cafe owners operate their businesses and the development trajectories of the backpacker enclaves.