Smallholder farms represent the largest population of dairy cattle farms in Indonesia. Dairy activities can play an important role to secure the livelihood of smallholder farms. However, small farms face several constraints and challenges to be sustainable in the future. To assess the sustainability of smallholder dairy farms and to understand in what conditions farms are more sustainable, we conducted a study in two districts of the West Java Province. Our method was based on participatory meetings that allowed us to identify “critical features” of the local farming systems, and associated indicators. From discussions with local stakeholders, we proposed 6 “strategic indicators” of sustainability. Five of those indicators were related to the social and economic dimensions of sustainability, which appeared to be crucial in the local context. To assess the sustainability of farms based on those 6 indicators, we collected secondary data from the local cooperative, and carried out a formal field survey to 355 farmers from May to August 2015. Results showed that the most sustainable farms were those who had highest capital and diversified activity. Farms which had low capital but had additional activity were more sustainable than specialized ones. Whereas the level of farm income appears to be linked directly to farm capital, pluriactivity contributes to reduce risks related to dairy business and to gain benefit from synergies between activities. In the future, policies and projects to enhance farm capital and farmers’ pluriactivity will be needed to support the sustainability of smallholder farms.