The study introduced a very important issue for the development of labor market in any developing country. The rapid changes in technology and communication imposed challenges on education institutions for the development of labor market to meet local communities. These institutions have more responsibilities to provide professional and skilled workers for the private and punkie sectors. Although, serving community is an important objective in higher education, but in most of developing countries, the process of development is slow to meet local needs and challenges of and globalization. Many developing countries invested in preparation of professionals, but the problem is the shortages of skilled workers which constitute the largest segment of labor market. Therefore, this study focused on community colleges as the key for the preparation of skilled workers at the bottom of labor market. Based on the success of these colleges in developed countries like United States, Europe, and Japan. This study investigated community colleges in Saudi Arabia to examine their roles in meeting market needs. The study used two instruments; a survey of 25 community colleges was conducted through the WEB, and interview of 22 participants by asking them to use SWOT analysis. The study revealed that community colleges in Saudi Arabia face many obstacles in reaching the objective of preparing skilled workers for local community and labor market. These obstacles center on the quality of programs offered and the gap between community and lack of skills needed by employers. The study proposed a model for innovation and expanding community colleges to increase their role in labor market, which consisted of four parts interrelated; university, community colleges, labor market, and community. Community colleges were considered as the base of the model, where university provide services to community and labor market to get skilled workers. It is also suggested that the first two years of university will be considered community college for students who cannot get have high achievement for the first two years in the university, also the study outlined many benefits for both universities and local communities and labor market in Saudi Arabia. This model may be applicable for other developing countries which face similar obstacles in the development of market needs.