Potato (Solanum tuberosum) microtuber production through in vitro culture is a promising strategy to overcome the shortage of disease-free seed potatoes, yet the combined role of organic nitrogen and gibberellin inhibitors in optimizing tuber induction remains poorly understood. The interaction between peptone as an organic nitrogen source and paclobutrazol as a growth retardant has not been widely studied in microtuber protocols. This study aimed to evaluate the effects of peptone and paclobutrazol on vegetative growth and microtuber induction of potato variety Dayang Sumbi in vitro. The method used was a factorial completely randomized design with five concentrations of peptone (0; 0.5; 1.0; 1.5; and 2.0 g L⁻¹) and paclobutrazol (0; 0.5; 1.0; 1.5; and 2.0 ppm L⁻¹) with ten replications. The culture was carried out in two stages: vegetative growth on MS medium with peptone (2 months) and microtuber induction on medium with paclobutrazol in dark conditions (2 months). Data were analyzed using analysis of variance (ANOVA) (p ≤ 0.05) and Duncan's Multiple Range Test (DMRT) at the 5% level. The result showed that peptone significantly increased vegetative vigor, while paclobutrazol 1.0 mg L⁻¹ accelerated initiation and increased the number and size of microtubers, with higher concentrations inhibiting growth. The interaction between the two significantly affected all tuber parameters. The combination of medium–high peptone with paclobutrazol 1.0 mg L⁻¹ provided optimal conditions for balanced growth and microtuber formation.