One of the major goals of coral reef conservation is to determine the most effective means of managing marine resources in regions where economic conditions often limit the options available. For example, no-take fishing areas can be impractical in regions where people rely heavily on reef fish for food. In this study, we test whether coral reef health differed among areas with varying management practices and socioeconomic conditions on Pulau Weh, in the Indonesia province of Aceh. Our results show that gear restrictions, in particular, prohibiting the use of nets, were remarkably successful in minimizing habitat degradation and maintaining fish biomass despite ongoing access to the fishery. Reef fish biomass and hard-coral cover were two to eight-fold higher at sites where fishing nets were prohibited. Most interestingly, the guiding principle of the local customary management system, Panglima Laot, is to reduce conflict among community members over access to marine resources. Consequently, conservation benefits in Aceh have arisen from a customary system which lacks a specific environmental ethic or the means for strong resource based management. Panglima Laot includes many of the features of successful institutions, such as clearly defined membership rights and the opportunity of resource users to be involved in making, enforcing, and changing the rules. Such mechanisms to reduce conflict are the key to success of marine resource management, particularly, in settings which lack resources for enforcement.