Abstract: This study aims to develop a model of knowledge strategy-based entre preneurial capacity to achieve sustainable competitive advantage of rurol banking in Central Java Province. The sampling method is “Purposive sampling” by considering the characteristics of the population items, namely: operational experience for at least 5 year and representatives of each area of rurol banking in Semarang, Surakarta and Purwokerto. Then, the sample size is 150 of 251 (59.7%) of top managers of rurol banking. To analyze the data in this study, it used the Structural Equation Modeling (SEM) of the AMOS software package. The findings of this study explain that; the first step in promoting a sustainable competitive advantage through knowledge sharingis by prioritizing the quality of interaction, willingness and ability. Efforts to improve a sustainable competitive advantage through knowledge exploitation built by knowledge sharing are by prioritizing to actively accept changes and introduction, solve problems together, use and combine new knowledge in operation. Efforts to improve a sustainable competitive advantage through theknowledge exploitation built byrisk-takingare by prioritizing a strong tendency for high-risk projects (with the possibility of gaining high-return), a high courage for the action snecessary to achieve the goal, having an aggressive attitude to optimize the possibility of utilizing existing potentil opportunities and enjoying the challenge of the risk situation. Efforts to improve a sustainable competitive advantage through knowledge exploitation built bya pro-activeare by prioritizing to anticipate problem more quickly than competitors, future oriented, addressed bytechnology, launching product selectively and system atically search fornew ideas. Efforts to improve a sustainable competitive advantage through knowledge exploitation built by the in novativeness are by prioritizing the speed of developing products, the implementation of new technology and market development.