This paper investigates the role of common institutional blockholders (CIBs) in promoting strategic alliances and facilitating the transfer of human capital between alliance partner firms. We find that firms are more likely to form strategic alliances (including research and development (R&D), licensing, manufacturing, and marketing alliances) when they share CIBs with a larger proportion of their industry peers. To establish a causal relationship, we exploit the exogenous shocks to CIB ownership induced by annual Russell 1000/2000 index reconstitutions. Our firm-pair-level analysis indicates that two firms are more likely to form alliances when they share a CIB. Additionally, we show that R&D alliance partner firms connected through CIBs exhibit greater across-partner redeployment of R&D-related human capital than partner firms without CIB connections. Overall, our findings underscore the significance of common institutional blockholder ownership in reducing the distrust that hinders strategic alliance formation and in realizing the economic benefits of such alliances.