Based on in-depth interviews and observational data from NGO practitioners in China, this study examines the practice of inter-organizational collaboration and the impact of institutional barriers under the authoritarian regime. Two major gaps in previous literatures are identified. First of all, when examining the role of state in NGO development, previous studies tend to view NGOs as one single actor negotiating the state with a highly coherent target and strategy. This study shows that this assumption is inaccurate. NGOs do not possess a coherent identity and interest; therefore, they do not negotiate with the state as a single actor. This fact also impacts their opportunities and efforts on building inter-organizational relations, leading to further barriers to collaboration and network building. Secondly, when discussing the institutional constraints to network building, previous literatures fail to reveal the hidden mechanism beyond direct repression. This paper points out that the impact of institutional constraints on NGO collaboration is more complex than previously discussed. With inconsistent or even conflicting interests and identities, NGOs tend to internalize institutional constraints from the external state power. This mechanism of internalization in turn reinforces the conflicting identities among NGOs. To further examine the internalization of institutional constraints, three mechanisms are identified: identity fragmentation, resource competition, and risk avoidance. Unlike previous belief that the state power over the civil society acts through direct repression and restriction, this study shows that the implementation of state power can be more subtle and penetrative.