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Isolated communities on small islands are often characterized as vulnerable and marginalized. We studied the recent history of Laingpatehi, a village on Ruang Island off the north coast of Sulawesi, Indonesia to show that the marginalization-vulnerability nexus can be offset by capacity and social cohesion to enable sustainable livelihoods. The island has been impacted by volcanic eruptions, earthquakes, and competition for marine resources from mainland-based fishermen. The community has shown a remarkable ability to cope and prosper in the face of a series of external hazards. We used a sustainable livelihoods approach to identify the assets that enabled the villagers to cope. Strong social cohesion was central to the ability to organize the community and confront hazards. A diversified livelihood strategy drawing on the small island environment and its coastal and marine resources, income generating activities in a distant satellite village, and significant remittances from employment in other parts of Indonesia underpinned people’s capacities to face hazards. Government assistance played a supporting role. The case of Laingpatehi demonstrates how remoteness, rather than being a source of vulnerability, can provide access to existing resources and facilitate innovation. Disaster risk reduction strategies should focus more on reinforcing these existing capacities to deal with hazards and less on physical protection and postdisaster responses.