The existing space governance model characterized by ambiguous and outdated laws requires improvement. Scholars and experts suggest that institutional innovation and a decentralized governance model hold the potential for addressing challenges in governing space environmental protection. This paper aims to propose feasible and efficient methods for managing concerns related to the environment in outer space while advocating a polycentric approach towards addressing issues arising from factors such as human-generated space debris. Furthermore, it emphasizes that multiple entities including state governments, international organizations, and non-state actors should take measures to strengthen bottom-up approaches toward effectively protecting the environment in outer space. Within a decentralized model of space governance, sustainable development and exploitation of the space environment become achievable goals. Thus, human interests can be comprehensively considered and safeguarded in an era characterized by the commercialization of outer space.