This research aimed to discover the social capital and externality value as well as formulating an alternative strategy for social capital enhancement to enforce the positive externality value of sustainable tourism sector. This research is a case study by using qualitative approach and descriptive analysis. The data obtained through observation, depth interview, and questionnaire towards tourism Small Medium Enterprise (SME) and the community of Candran and Wukirsari Tourism Village in Yogyakarta Special Province. The tool of analysis to assess multiplier effect from the tourism activity is Ratio Income Multiplier, while SWOT analysis is used to formulate of social capital enhancement strategy. The important findings in this research are the Bounding Social Capital is the category of the social capital type which occurs in this sustainable tourism destination. The community is assured that social capital is the key to success in developing sustainable tourism. The tourism activity is having a positive impact towards the community in the aspects of economic, socio-culture, and physical aspect of the living environment which indicated from the Ratio Income-multiplier value. Four strategies are formulated to enhance social capital that able to increase positive externality, which are maintaining social institution/order; forcing social literacy; the extensification of the attraction of local culture art, and the strengthening of economic sharing management towards tourism village management.