Vocational education plays a strategic role in preparing skilled human resources ready to enter the workforce. However, many graduates of Vocational High Schools (SMK) in Indonesia still face difficulties in obtaining job opportunities and developing entrepreneurial careers due to the gap between school-based learning and industry demands. This study aims to analyze the integration of the Teaching Factory model in enhancing employability and entrepreneurship competencies among students of SMK Muhammadiyah Sungai Bahar Muaro Jambi. The research uses a qualitative approach with a case study design to gain an in-depth understanding of the implementation of the Teaching Factory in vocational education. Data were collected through in-depth interviews, observations, and document analysis involving teachers, students, and school management. Data analysis used an interactive model consisting of data reduction, data presentation, and conclusion drawing. Findings show that the implementation of the Teaching Factory at SMK Muhammadiyah Sungai Bahar Muaro Jambi provides contextual learning experiences resembling real industrial environments. Students are directly involved in production processes, quality control, work planning, and customer service, which significantly improves technical competencies as well as soft skills such as teamwork, communication, and problem- solving. Furthermore, participation in business-oriented activities within the Teaching Factory fosters entrepreneurial awareness and practical understanding of business operations. The study concludes that the integration of the Teaching Factory significantly contributes to strengthening the employability and entrepreneurial readiness of SMK Muhammadiyah Sungai Bahar Muaro Jambi graduates. Therefore, strengthening collaboration between schools and industry partners is important to optimize the implementation of the Teaching Factory in vocational education.