In Timor-Leste, customary institutions contribute to sustainable and equitable rural development and the establishment of improved access to and management of land, water and other natural resources. Drawing on multi-sited empirical research, we argue that the recognition and valorization of custom and common property management is a prerequisite for sustainable and equitable land tenure reform in Timor-Leste. In a four-community study of the relationship between land access and the practice of rural livelihoods in eastern and western districts of Timor-Leste, where customary management systems are dominant, we found different types of traditional dispute resolution, with deep roots in traditional forms of land management and with varying levels of conflict. The article shows how customary land tenure systems have already managed to create viable moral economies. Interviewees expressed a desire for the government to formalize its recognition and support for customary systems and to provide them with basic livelihood support and services. This was more important than instituting private landholding or state appropriation of community lands, which is perceived to be the focus of national draft land laws and an internationally supported project. We suggest ways in which diverse customary institutions can co-exist and work with state institutions to build collective political legitimacy in the rural hinterlands, within the context of upgrading the quality of rural life, promoting social and ecological harmony, and conflict management.