The studio will be located at 33 Bong Bong Street, behind the Grand Hotel, and operate from 10am to 5pm Monday to Friday and 10am to 4pm on Saturdays.

The building is owned and occupied by the Illawarra Cattle Society of Australia, which has given its consent for the development.

Cr Dennis Seage, a former police detective, led the opposition to the proposal, saying tattoo parlours "can, at times, attract undesirable people".

"Nothing good will come of this studio, not for the community or, indeed, the proponent ... he will be harassed by bikie gangs and money will be extorted from him," Cr Seage said.

"If he resists, he will regret the ramifications that will follow ... tattoo artists are easy targets."

Cr Seage found support from Cr Warren Steel.

"I think the people we represent in the municipality would be against it," Cr Steel said.

Cr Neil Reilly said some people did not like tattoos, while others did not like the people who provided tattoos.

"Tattoos have been a tradition for 5000 years and they are becoming more and more popular," Cr Reilly said.

"Research has told us 25 per cent of people under 30 have tattoos ... our moral indignation can't deny someone who legally seeks to have a tattoo or provide a tattoo; that's the law."

Cr Andrew Sloan said he shared some of Cr Seage's concerns. However, he said in recent times other councils had been unsuccessful in challenging similar developments in the Land and Environment Court and he was not willing to risk $40,000 to $50,000 of ratepayers money in a challenge.

Mayor Brian Petschler pointed out Kiama had previously been home to a tattoo parlour in Terralong Street.

However, in his right of reply, Cr Seage said the reason that operator shut down was because he was forced to close by the Rebels bikie gang.

"He was harassed and harangued and extorted to such a degree he couldn't stay in this town one more minute," he said.

"This is not about tattoos; it is about the threat this attracts."

Councillors voted 5-4 against Cr Seage's motion not to allow the studio to be approved.

One of the partners in the business, known as "Tad", told the Mercury the studio would be a good thing for Kiama.

"We are willing to take a chance ... it is a business and we see opportunity there."

He said Kiama was chosen for several reasons, including the fact it was the home town of Matt Hall, who would be the studio's artist.

"First off, Matt has grown up in Kiama, so he can stay close to home," Tad said.

"Matt is into tattoos; that is his passion and that's what he wants to do.

"Also, there is no other competition there. There are tattoo parlours everywhere these days and we see a good business opportunity there.

"We were surprised by some of the comments made ... we are all family-oriented and have nothing to do with bikies."