In 'Olifant,' the United State Supreme Court addressed the question of whether tribal courts can exercise criminal jurisdiction over non-Indians for acts occurring on Indian reservations. Petitioner Oliphant, arrested by Suquamish tribal officers on the territory belonging to the reservation, was charged with assaulting a tribal officer and resisting arrest. Since he was a non-Indian resident of the reservation, the Federal court invalidated the exercise of tribal court criminal jurisdiction on the grounds of the existence of inherent limitations on Indian sovereign power implied by the Indian treaties with the U.S. government. While this ruling accords with the trend away from a theory of jurisdiction based on territory towards a theory based on citizenship, it conflicts with the current Federal policy of encouraging tribal self-government. Furthermore, it ignores the fears of tribal members that non-Indians committing offenses on Indian land or against Indians are not adequately punished by nontribal legal systems. Therefore, a new jurisdictional theory based on the U.S. Supreme Court guidelines is proposed. This theory balances interests in both tribal-Federal and tribal-State jurisdictional controversies, emphasizing the tribal interest in self-government, and discarding disparities of treatment based on race. Because judicial creation of a jurisdictional scheme on a case-by-case basis is prohibitively cumbersome, Congress should act to identify the proper forum for specific offenses or classes of offenses. Footnotes and information on the development of the principle of retained sovereignty illustrated by court cases are included.