Reforms within the Indonesian political system, following the fall of the Soeharto regime in 1998, have led to some fundamental changes in the structure of government and civil administration. Two new laws, Law No. 22/1999 on Regional Government (Decentralization Law) and Law No. 25/1999 on the Fiscal Balance between the Central Government and the Regions (Fiscal Decentralization Law), which have already been revised with the enactment of laws 32/2004 and 33/2004 promote a reconsideration of community-based approaches to coastal zone management. These laws also provide new opportunities for institutionalization of local values and community institution to manage coastal resources. This paper examines community-based and co-management approaches in coastal zone management in Indonesia. It is argued that co-management is an appropriate approach in managing Indonesian coastal zone as it allows for the development of a model containing a balance of power between governments, communities as whole and a wide range of individual stakeholders.