This paper links the settlement of the separatist conflict to the democratization that took place in Indonesia after fall of President Suharto in 1998. It argues that the separatist conflict resolution in Aceh (constructed under the Helsinki Agreement in 2005) is a result of the democratization process in Indonesia that ha raised awareness among the Indonesian government and GAM (the free Aceh movement) leaders of the importance and effectiveness of dialogue and negotiation to settle the conflict. in addition, focusing on the case of Aceh, this aper also contributed to the literature on the relationship between democracy and peace by identifying the circumstance under which democracy may have a positive link with peace.