There is a growing need for large-scale maps and data in developing countries for the quantification, management, and planning of forest resources at community level to address emerging needs and the demands of a rapidly growing population. This paper demonstrates how remote sensing, global positioning systems (GPS), and digital elevation models (DEMs) can be used to produce large-scale geometrically correct orthophoto images for the entire 111 km² Jhikhu Khola watershed in Nepal. Furthermore, it describes the potential for the application of advanced geographical information systems (GIS) technology in participatory community-based forest resource inventories in the middle mountains of Nepal. Geometrically corrected orthophotos were used to conduct a detailed community forestry inventory in a middle mountain watershed in order to provide better management and planning of the forest resources by the local communities. An intensive field survey was conducted in 36 community forests in the watershed, with the participation of forest user groups.