It is estimated just over 10 million people visited Wales between October 2015 and September 2016 - a 1.5% drop.
The Great Britain Tourism Survey showed a similar 1.1% fall for visitor numbers in Great Britain as a whole.
The Economy Secretary Ken Skates has said Wales is still in a "strong position".
Overall, the trend for the last three years still remains up - for both Wales and the rest of the UK.
"Campaign work now continues to convert early interest and opportunities arising from the weak pound into bookings for the summer," said Mr Skates.
"In what is an extremely competitive market place, tourism in Wales is in a strong position.
"We've had two record breaking years and our aim is to sustain growth - being aware that global events and competition will mean that not every year will be a record breaking one."
Peter Cole, Wales representative of the Tourism Society Board, added: "It is clear that tourism in Wales, like the rest of the UK, has fought back strongly after the financial crash, but it would be naÃ¯ve to think that year on year increases in any one part of the market are inevitable for any part of the UK with so many variables and factors at play.
"Following the Year of Adventure in 2016 and investments such as Zip World and Surf Snowdonia, north Wales is now being talked of by key influencers as a challenger for the Lake District as the UK destination of choice for adventure activities."
Fewer British holidaymaker chose Wales as their destination last year, suggest the latest official survey figures.