Cold Dark Matter (CDM) models of galaxy formation had been remarkably successful to explain a number of observations in the past decade. However, with both the theoretical modeling and the observations being improved, CDM models have been very recently shown to have excessive clustering on the sub-galactic scale. Here we discuss a solution, based on our high-resolution numerical simulations, to this outstanding problem by considering Warm Dark Matter (WDM). Our results show that the over-clustering problem on sub-galactic scales can be overcome by WDM models, and all the advantages of CDM models are preserved by WDM models. Therefore, the WDM model will become an interesting alternative to the well-studied CDM models.