This article seeks to make a contribution to the existing literature on the South China Sea issue by focusing on the impact of regional institutions on conflict management and resolution as well as the limits these institutions face when seeking to de-escalate disputes. The Association of Southeast Asian Nations (ASEAN) has attempted to preserve its neutrality and unity over sovereignty disputes and has focused on the establishment of a conflict management mechanism with China-the Code of Conduct for the South China Sea. However, ASEAN’s efforts have been undermined by an escalation of the situation in the disputed waters and by rising China-U.S. competition in the region. The article concludes by discussing various scenarios regarding the future of ASEAN’s South China Sea policy.