Abstract Social enterprise is a new phenomenon in Macao. Recently this phenomenon attracts more attentions from government, business and not-for-profit organizations. The purpose of this exploratory study is to identify the key factors influencing the organizations to set up social enterprises in Macao, which include both challenges and opportunities they are facing. In this study, 258 questionnaires were successfully sent out to the social service associations in Macao. Thirty three of them were returned and twenty eight were valid. Descriptive and relational analyses were performed for the collected data by using the SPSS. Furthermore, five associations were selected for conducting the in-depth face-to-face interviews and the grounded theory was applied for analysis. The results from quantitative and qualitative data revealed that there are challenges of financial capital, human capital, policy and politics, social conditions and collaboration with business in Macao. These barriers are consistent to previous studies. On the other hand, there are opportunities for the start-up of social enterprises which include the potential resources of government and the developing and diversified industries. They are all localized advantages provided in Macao. Besides, the number of the social service associations which have established social enterprises in Macao was estimated as 41 based on the sample data. Based on the findings, the key components for the start-up phase of social enterprises are identified by using the study in Macao as reference. Moreover, this study found that the associations with shorter history, more long-term volunteers and more long-term staff tend to have more intention to set up social enterprises. According to the research results, the recommendations on how to facilitate the establishment of social enterprises in Macao include the government support, building the network and knowledge sharing between the social enterprises, setting up the support organizations and training up more professionals were described. Lastly, the limitation of this study and suggestions for future research were discussed.