Bilateral relationships between Malaysia and Indonesia have always been cordial, augmented largely by their shared ethno-cultural, value and religious affinity. Cooperation and collaboration initiatives and arrangement between the two countries are well-established in various fields, ranging from security, economic and trade, health to education. However, these friendly bilateral relationships have been occasionally marred by diplomatic frictions and protests arising from their disputes over overlapping claims to maritime territory and boundary. Among the most notable, intractable on-going maritime territorial and boundary disputes between the two countries occur in the Malacca Straits. In resolving these particularly dispute, diplomatic negotiation has been the most common and if not, the only dispute resolution mechanism adopted by the two countries. What make the scope of this study departs from the existing literature is the focus placed on examining the process of diplomatic negotiations between Malaysia and Indonesia for amicable resolution of the disputes. Diplomatic negotiation is arguably the preferred method to delimit contested maritime boundaries as it has its own advantages compare to other alternative peaceful methods. This qualitative study uses content analysis approach to investigate and appraise the background and process of diplomatic negotiation between Malaysia and Indonesia to reach final settlement of their territorial area and boundary disputes in the Malacca Straits. In analyzing the case, the theoretical tools used are negotiation theory, and bilateral theory. The selected respondents for this study are comprised of experts and practitioners attached to government agencies such as Maritime Malaysia Enforcement Agency and Institute Diplomacy and Foreign Relation. Then, content analysis is applied to the coding process. The research finding reveal that the status of diplomatic negotiation between the government of Malaysia and Indonesia are still ongoing, with the immediate final resolution of the disputes remains to be seen. The contribution of this study lies in providing the strong facts and the real status about territorial dispute at Strait of Malacca between Malaysia and Indonesia and also the process of diplomatic negotiation between Malaysia and Indonesia in settlement the territorial dispute at Strait of Malacca.