This research discusses Indonesia-Malaysia relations during the post-Suharto era (1998-2008). The issues discussed are Indonesian leaders involvement in the Malaysian domestic affairs, terrorism issue, border issue, Indonesian immigrant issue and culture disputes. By applying defensive realism this research found that the new international political structure after the end of the Cold War influences to the changes Indonesia-Malaysia relations. Nevertheless, other factors such as leadership (idiosyncratic), domestic politics, and kinship [serumpun] also give significant impact to the relationship.