This paper presents an analysis of the challenges for the development of electronic government (e-government) in Indonesia. The study mainly focuses on the implementation of egovernment in the transaction stage. The type of e-government is discussed, the stage of e-government development is evaluated, and the progress of e-Indonesia initiative is assessed. There are various obstacles to the development of e-government in Indonesia including poor ICT infrastructure, inadequate human resources, lack of readiness among citizens to use e-government services, and unsupportive environment. Due to these challenges, it is recommended for the Indonesian Government to develop comprehensive programs and progress assessments which include technology, organization, citizen and environment dimensions to support the development of e-government.