Institutional capacity-building is one of the important strategies affect on developing justice-oriented agriculture and good governance. Experience in other countries showed that efficient institutions have a vital role in promoting smallholder agriculture and sustainable management in natural resources. But Iranian agricultural policy makers and managers neglected it in spite of the importance of institutions in agricultural Smallholder developing, because of lack holistic attitude on whole parts of agricultural development. Hence the main purpose of this quality research was to modeling of Effective Institutionsfor smallholder agriculture development with emphasis on NGOs using grounded theory. In this regard, samples selected using purposive and theoretical sampling. Semi-structured interviews used to data collection and the average interview lengthen 70 minutes. Also data pluralism and participants feedback used for approving of reliability and validity. Data analysis showed that developing of “small and medium enterprises” and performing of functions including “research, development and encouraging local innovation”; “advising and generating idea and plan”; “identify entrepreneurs and entrepreneurial support”; “land contracting services”; and “insurance-financial services”. These structures should be considered in the plan of non-governmental institutional capacity-building in agricultural sector.