Given that conditional cash transfers (CCTs) can be a very effective social welfare program to reduce poverty and improve education and health outcomes, but may exacerbate conflict, this thesis addresses strategies for conflict-sensitive formulation and implementation of CCTs in Indonesia. This thesis raises the immediate need to address poverty in Indonesia and seeks to learn from the successes and challenges of other CCTs, such as those enacted in Mexico, Brazil, Turkey, and the Philippines. This thesis also looks into existing literature comparing the effectiveness of CCTs to other social protection programs (SPPs) and finds that CCT is one of the most effective (SPPs). Moreover, this thesis also explores the reasoning and conditioning factors as to how CCTs may reduce or exacerbate conflict, and finds that it can reduce conflict through the education channel (e.g. positive peer effect, reduction of time to spend doing other activities), employment channel (e.g. education leading to higher chances of getting employed), and the income substitution channel (cash benefits received would reduce incentives to engage in financially-motivated crimes). Nonetheless, this thesis also seeks to enhance the targeting mechanisms of CCTs to ensure that it does not exacerbate conflict. More specifically, this thesis concludes that Program Keluarga Harapan (PKH), the CCT program in Indonesia, should employ a more centralized targeting to reduce opportunities for local elite capture in its 7,000 districts. Furthermore, this thesis proposes the creation of a more competitive system in electing which districts it works with by asking district heads to submit proposals outlining why and how PKH will work in their respective areas, which will hopefully motivate them to be more accountable and to reduce administrative costs.