Rural communities continue to encounter persistent challenges in achieving sustainable local economic development due to limited entrepreneurial competencies, insufficient innovation capacity, and inadequate community participation in development initiatives. Although numerous empowerment programs have been implemented, many remain fragmented and emphasize short-term technical training rather than participatory capacity-building processes capable of generating sustainable socioeconomic transformation. This community service project therefore aimed to empower rural communities through an integrated participatory capacity-building model designed to enhance entrepreneurial skills, stimulate social innovation, and strengthen sustainable local economic development. The program employed a Participatory Capacity Building (PCB) approach integrated with Participatory Learning and Action (PLA) involving 45 rural micro-entrepreneurs. The implementation consisted of sequential stages including needs assessment, participatory planning, entrepreneurship and digital marketing training, social innovation workshops, business mentoring, and comprehensive evaluation using pre-test, post-test, observation, and participant satisfaction assessments. The findings demonstrate that the program substantially improved entrepreneurial competencies across all evaluated dimensions, with digital marketing competency exhibiting the highest increase (51.5%), followed by social innovation (41.1%), financial literacy (38.9%), and entrepreneurial skills (37.1%). Entrepreneurial knowledge also increased significantly, as participants classified within the high knowledge category rose from 17.7% before the intervention to 86.7% after program completion. Furthermore, participants successfully developed several community-based social innovation initiatives, experienced measurable improvements in business performance, maintained consistently high participation throughout program implementation, and reported very high satisfaction regarding training quality, mentoring, and overall program delivery. These findings indicate that participatory capacity building represents an effective community empowerment strategy capable of integrating entrepreneurial learning, collaborative innovation, and community participation to generate sustainable local economic development. The study contributes a practical community-based empowerment model that can be adapted to strengthen entrepreneurial ecosystems and socioeconomic resilience in rural communities.