Indonesia’s COVID-19 Resilient Village (Kampung Tangguh) initiative has significantly impacted crucial institutions and highlighted the vulnerability of village-level social systems during the pandemic. This study focuses on the program’s institutional dynamics, particularly in Malang, East Java, to understand its role in empowering social capital and resources. Unlike previous works that mainly explore government responses, this qualitative research relies on participatory social science methods and purposively selected informants. The findings reveal that the Kampung Tangguh program transformed local leaders into key actors, shifting from apathy to proactive engagement in pandemic control. This community-driven resilience system led by neighborhood heads and villagers marks a crucial turning point. It establishes a proactive model adaptable to various crises as a foundation for researchers and policymakers, fostering innovation and driving social system transformation. This study underscores village-level democratization and knowledge dissemination’s pivotal role in effective governance and institutional evolution.