Abstract The rapid expansion of oil palm plantation areas promoted poverty because of job creation and community welfare. However, oil palm still has substantial socioeconomic and sustainability implications, so an agricultural institution must support the palm oil business. The existing oil palm smallholder institutional is more pragmatic based on needs or meets the requirements to get assistance or facilitation from outside parties. The research objective is to create a model of integration and sustainability of institutional governance based on local specifications of the area. The research uses primary and secondary data sources. Based on the field institutional cooperation of smallholders involving cooperatives, smallholder groups in a corporation, and palm oil mills, supported by regulatory providers. The local government is responsible for establishing, developing, and institutional strengthening smallholders and financial funding support. In addition, it is also necessary to enter input with a Joint partnership program based on a Written Agreement that regulates the rights and obligations of each party, the partnership period, and other binding provisions, including the guarantee of the farmer’s Fruit Fresh Bunch (FFB) price. Institutions implemented following their functions and objectives based on local, and regional specifications to realize the sustainability of independent oil palm smallholders.