Bangelan Tourism Village in Indonesia holds significant potential as a tourist destination that delivers both economic and social benefits to the local community. This study focuses on the role of social capital as a key factor in the success of sustainable tourism development. The theoretical framework of this research centres on social capital, which includes trust, social networks and norms as essential elements that facilitate collective action between communities and the government to achieve sustainable tourism. Social capital, in its connection to sustainable tourism, enables coordination and collaboration among local stakeholders to pursue common goals. Uniquely, this study demonstrates that community‐driven collective action, supported by social capital, is more effective than government‐initiated programmes in advancing sustainable tourism in rural Indonesia, filling a gap in the existing literature. Data were collected via questionnaires from 261 heads of households in Bangelan Tourism Village and analysed using the structural equation modelling (SEM) partial least square (PLS) method. The results indicate that social capital, represented by trust, social networks and norms, has a strong positive influence on collective action. In turn, collective action has an even stronger impact on achieving sustainable tourism. The practical implications underscore the importance of strengthening social capital to promote active community participation in tourism management, through strategies such as community training and policies that foster mutual cooperation. This research provides a significant contribution to the literature on the relationship between social capital, collective action and sustainable tourism development, offering valuable insights for policymakers seeking to strengthen social capital in support of sustainable rural tourism.