As a country with an extensive area of peatlands, Indonesia provides abundant sources of natural resources and a vast amount of carbon stocks. However, the uncontrolled logging and the expansion of timber and palm oil plantations have changed Indonesia’s peatlands into a source of disasters, that is, wildfires. For years, Indonesia has been accused of violating state responsibility about transboundary haze resulting from wildfires in peatlands. This chapter discusses recent legal development in the protection and management of peatlands in Indonesia and analyzes how regulatory measures addresses the issue of peatland rehabilitation. The chapter argues that requiring the water-table level of a minimum of 0.4 m from the surface is justified according to the precautionary principle. The chapter is also of the opinion that the recovery of peatlands needs to be conducted under the polluter-pay principle, leading to the use of strict liability against peatland draining activities.