Community forests management in Nepal has been exemplified as one of the most successful programs for participatory resource management. The success of community forestry is described in terms of restoring degraded land and habitats, conserving biodiversity, increasing supply of forest products, empowering women and disadvantaged groups, generating rural incomes, and developing human resources. However, the contribution of existing community forest management practices to biodiversity conservation in the form of enhancing species diversity and ecosystem functioning is questionable. We reviewed the role of community forest management practices to biodiversity conservation based on published materials and our own observations. Practices such as seedling plantation; controlling wildlife hunting, forest fire and grazing; regulating forest encroachment; protecting soil erosion prone area and water resource area assist biodiversity conservation, paradoxically other practices such as species selection; removal of unwanted species during silvicultural activities; leaf litter collection; elite dominance in decision making; and traditional knowledge depletion have detrimental impact on biological diversity and ecosystem function of community managed forest.