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Environmental peacebuilding is the integration of natural resource management into conflict prevention, resolution and recovery so as to support peace and environmental sustainability. Most studies have been of cases where there is significant involvement of external (usually international) actors. They thus provide implicit support for liberal peacebuilding practice, which is itself the subject of much critique. Conversely, documented examples of environmental peacebuilding from below are rare. We analyse an endogenously emerging environmental peacebuilding institution, the customary tara bandu process in Timor-Leste. We explain the way tara bandu is used bottom-up to promote the sustainable use of natural resources and more peaceful relations. Tara bandu proves to be a successful, locally diverse environmental peacebuilding institution. We further show how recent attempts by international peacebuilders and state institutions to employ tara bandu have somewhat ignored the way it is deeply interwoven with local social and spiritual relations, and in so doing have jeopardized its legitimacy and efficacy. This suggests that attempts from outside actors to facilitate environmental peacebuilding may be constrained by a mismatch between theorized norms of social and environmental relations (such as ‘shared interests’) and local cultural particularities.