Forests and tree resources in the rural landscape provide a number of important environmental and socioeconomic benefits. This paper describes farmers' responses to changes in the rural economy as they relate to tree management on private farm land in a hill district in Nepal, and makes an attempt to determine factors that influence their decisions on tree growing. Farmers grow trees to meet their specific household needs which change as their household situations change and are influenced by a number of factors such as availability of land and labour, types of trees available, techniques for, and risk involved in, growing them, guaranteed benefits as well as markets for both forest products, and employment of family labour. Implications are discussed for forestry interventions that aim to improve smallholders farming systems, which are the smallholders' livelihoods.