This thesis examines the extent to which the educational sovereignty of a less developed state can be sustained when it considerably expands its involvement with transnational education. The thesis focuses on the case of Indonesia, which, since independence, has increasingly drawn on the education programmes of foreign providers, especially the US, as it has pursued its development agenda. In this context, the growth in the prevalence and importance of transnational education has led to questions about its impact on Indonesia. These questions are centred on whether transnational education is a vehicle through which Western education influences affect both the cultures and educational systems of non-Western states through the one-way transfer of knowledge. The case of the Indonesia-US education relationship provides a unique situation for the study of transnational educational exchanges and questions of educational sovereignty. In this case study, based on in-depth interviews with key actors in the negotiation of Indonesia-US education agreements and a comprehensive review of the official documents and other relevant literature, the extent to which Indonesia’s educational sovereignty has been sustained through a period which has seen the strengthening the Indonesia-US education relationship, is examined. The research finds that Indonesian enthusiasm for access to US education resources and opportunities is tempered by sensitivity to the risk of losing control over educational programmes. Negotiations over educational agreements are characterised by the assertion of equal status by Indonesian officials and confidence in their ability to retain control. This thesis concludes that sustaining educational sovereignty depends on the ability of the state to negotiate and renegotiate the terms of the relationship with provider states.