The liberal peace project has dominated state-building operations since the end of the Cold War, including in Timor-Leste. However, the attempt to institutionalise the liberal peace faced significant challenges in Timor-Leste's fragmented subsistence-based society. This resulted in the creation of shallowly rooted and poorly-understood liberal state institutions that were disconnected from the majority of Timorese, who continued to follow their local sociopolitical practices. In response, the state has increasingly engaged with these local practices in order to create state institutions that make sense to the people they seek to govern. This engagement has occurred through the formalisation of local sociopolitical institutions, the recognition of local justice systems and the utilisation of local ceremonies and practices. Therefore, this article argues that a liberal-local hybrid peace project has emerged to guide state-building in Timor-Leste, which may indicate how similar projects could develop in the future.