Kinmen National Park is well known by its world's best preserved villages of Southern Fujian architecture and battlefield heritages. The National Park Service commissioned the reused traditional houses for Bed & Breakfast or restaurant and outsourcing to individuals. Therefore, tourists could be experienced traditional village life and cultural norms. The main purpose of this study is to analyze the adaptive reuse of traditional houses by in-depth interviews with B & B operators, National Park Service officials, the Kinmen county government officials, NGO leaders and other policy stakeholders. Research findings are listed as below: the outsourcing policy enables the conservation of traditional houses and settlement landscape to be more effective; the renovation case which is similar with ROT (Refurnish-Operate-Transfer) reveals the potential of institutional innovation; extended contract period is helpful to reinforce the investment incentives for the private sector; the innovation activity of the private sector is confirmed to be pretty successful by field research. The success of adaptive reuse policy of traditional houses also expands to the feedback and concern of community participation. The outsourcing policy also provides a sound foundation for the conservation of traditional settlement and the ambitious goal of application for the world heritage site.