This paper examines community forestry as a solution to the deforestation problem in Nepal. A case study of the World Bank funded Community Forestry Development and Training Project is considered in the prevailing and the resulting literature. The long-term sustainability of a community forestry project is the most important factor for community forestry projects to succeed. The conditions necessary for sustainability of community forestry projects in Nepal are presented. The most important conditions are incentives for wide local participation, clear property rights regarding the use of resources, and transfer of management responsibilities to the local people.