This paper sets out to demonstrate the link between development, state capacity and peace, employing Timor-Leste as the case study. It employs the association between state capacity and development to illustrate where if state capacity is lacking or functions improperly there is likely to be a low level of state legitimacy. This in turn manifests as lack of respect for or failure of rule of law, developing as generalised lawlessness and anti-state activity and eventually manifesting as intra-state or civil conflict. In particular, policing is seen as a critical component in state legitimacy, being the ‘front line’ of the judicial system from which legitimacy ultimately derives. This issue is particularly critical in states emerging from traditional legal and judicial structures, but which have not yet articulated into ‘rational-legal’ structures. Ipso facto, key state institutions, such as the judicial system and police are required to function well, while these are alone not enough to guarantee peace, they are significant contributors to and guarantors of peace.