This paper explores linkages between governance and poverty in Indonesia for the period 2001 to 2008. The dimensions of poverty reduction policy, which include poverty, inequality, and growth, demonstrate that the poor do not benefit proportionately from economic growth. It also shows clearly comparing with inequality, in which the result of the study shown that a strong link exists between governance indicators and poverty reduction. It is concluded that the improvement of voice and accountability, political stability, government effectiveness, regulatory quality, and rule of law can control corruption and the pro-poor policies, which ultimately reduce poverty in the long run. Facing the challenging of good governance toward poverty reduction, Indonesia needs to formulate and implement effectively its governance policies to encourage the good governance, including both of region and time dimensions.