East Kalimantan is a province of paradox. It has considerable economic potential, measured in terms of abundant endowments of natural resources. And yet it lacks infrastructure and has poor human resources, factors which condemn much of the population to live in poverty. Regional autonomy, implemented since 2001, has provided more political power and fiscal capacity to the region, and therefore it has been expected to give more opportunity for regional governments to accelerate regional development and bring their people to greater prosperity. However, East Kalimantan still harbors high levels of poverty. This study examines the extent to which regional governments use their authority, greatly expanded under regional autonomy laws, to address poverty issues in the province. This research utilizes qualitative methodology and employs a case study approach. It involves 63 interview participants from senior regional government officials, members of regional councils and other local stakeholders, which were selected using a combination of “purposive and snowball” sampling. Other secondary data collected include regional government documents and publications. The thesis argues that regional autonomy has provided regional governments with more political and fiscal capacity and has increased the role of regional governments in developing the regions. However, this has not necessarily meant that regional governments have been successful in alleviating poverty. It is argued that the insignificant achievement in poverty reduction is heavily shaped by the inconsistency of the regional governments in implementing program priorities due to the conflicting interests among decision makers, the limited capacity and low commitment of the local bureaucrats and members of regional councils in managing administration and regional development programs, regional political instability, poor coordination between levels of government and wide spread corruption.