<p>Nepal’s community forestry is considered as one of the popular model of decentralization in natural resource management. The program encompasses a set of policy and instrumental innovations that were especially designed to empower the local livelihoods through the proper management and utilization of forest products. Over the past three decades, the program has undergone a tremendous shift from state-centric and top-down to community-based participatory approach to forest governance by restructuring and reformulating plans and policies related to forest governance in Nepal. Despite the subsequent amendment of legislative and policies, Nepal’s community forestry continues to face challenges during its implementation phase. The existing policies and legislation are inconsistent and do not optimally support the pro-poor program, which is one of the major objective of Nepal’s community forestry program. Inequitable benefit sharing, exclusion of ultra-poor in decision making system, and elite capture are the major challenges that are to be resolved in coming years.</p>