This article analyses two security challenges facing the Royal Cambodian Government (RGC) and the Cambodian Defence Organization at the strategic level for the next decade. The first obvious challenge relates to the stalemated territorial dispute along the Cambodia–Thailand border, particularly the question of ownership of the Preah Vihear (called PhraViharn in Thailand) temple and its surrounding area since October 2008. Bilateral talks to manage the crisis and dispute failed, and the same happened to mediation and peacekeeping efforts by the Association of Southeast Asian Nations (ASEAN) in general and Indonesia in particular. This is considered to be a top security challenge for Cambodia’s national security and drives the military forces’ capability adjustment. The second challenge arises from the overlapping maritime boundary dispute with Thailand in an area which is believed to contain significant oil and natural gas reserves. The article will focus on the nature of the current border conflict with Thailand and its implications for the Cambodian Defence Organization given its limited budget and capability. This article argues that these two key security factors have significantly underpinned Cambodia’s strategic environment and have greatly impacted upon and shaped Cambodia’s reform agenda, defence posture and international engagements. It is also argued the conflict severely tested the regional organization ASEAN and Indonesia as its Chair.