The growing caseload of Indonesia’s formal judiciary underscores the urgency of developing alternative dispute resolution mechanisms that are more closely aligned with community values. This article critically examines the practice of customary justice in Manggarai as an expression of the living law within the framework of village autonomy and its process of integration into the state legal system. Employing a socio-legal approach that combines interviews, observations, and document analysis, the study finds that customary forums such as lonto leok and the practice of hambor function effectively in de-escalating conflicts, restoring social relationships, and producing community-accepted agreements. However, formal recognition through regional regulations generates a paradox: limited participation of women in decision-making forums and the risk of legal formalization that reduces customary values into mere administrative procedures. The principal contribution of this research is to propose a critical analytical framework for integrating customary law into the state legal system—one that does not rely solely on formal codification, but instead emphasizes diversity and flexibility in dispute resolution models. The Manggarai experience thus provides valuable insights for the global discourse on alternative dispute resolution and legal pluralism in the context of modern states.