At present in China, heritage protection is in a dilemma when facing heritage tourism. Based on a thorough understanding of the national conditions in China as well as the special features of heritage resources, and by following related principles, this paper makes a systematic analysis of institution selection which, for the benefit of both heritage protection and heritage tourism, undertakes a clear division of the functional districts within heritage sites, the confirmation of the different roles of heritage departments and non-heritage departments, the determination of the nature of business items and their ownership within and outside heritage sites, etc. Heritage departments take the responsibility of non-profit tourist presentations, while non-heritage departments (including tourist companies) aim at carrying out profit-making tourist services outside the heritage sites,and the specially granted business items within the heritage sites. To strengthen government regulation and fulfill the institutions, the country should set up professionally administrative department of heritage.