The maximum number of animal villagers you can have living on your island in Animal Crossing: New Horizons is 10. This limit applies to resident animal villagers and does not include the human player characters who share the island.
Villagers move in through the island's housing plots, campsite visits, mystery-island tours, and certain invitation methods. Once the island reaches 10 animal residents, a new villager generally must replace an existing one before another can move in. Players can influence who arrives by using Nook Miles Tickets to search for villagers or by inviting a campsite visitor.
The limit is easy to confuse with the number of human residents. New Horizons permits multiple player characters on one island, provided they use separate Nintendo Switch user profiles, but that does not increase the animal-villager cap. Similarly, the total number of possible Animal Crossing characters is far larger than the number who can live on one island.
The 10-villager limit helps preserve space for buildings, terrain design, shops, and public areas while still allowing a diverse island community.