This paper critically examines the application of a decentralisation principle in the community forestry (CF) programme of Nepal and discusses the implications of decentralisation efforts. Decentralisation applied in the forestry sector is devolution, which involves the transfer of functions or decision-making authority. The Local Self-Governance Act (LSGA) 1999 provides the framework for decentralised governance in Nepal. While assessing the LSGA 1999 and Forest Act 1993, it emerges that in many instances, forest legislation bypasses the local government. There exist conflicts and contradictions between the FA 1993 and LSGA 1999 which adds further confusion in the community forestry programme. Local government (LG) has always claimed any natural resources lying within its jurisdiction and initiated claiming ownership of the forest situated in their jurisdiction as per LSGA 1999. But local communities or community forestry user groups (CFUGs) reject any move of the government leading towards handing over of the forests to the LGs. Nevertheless they want an active role of the LGs in the community forestry programme, mainly in user group identification. Sustainable management of the forests is unlikely without the constructive support, cooperation and active role of the LGs. Thus, role clarification between different actors and stakeholders of CFs, especially LGs, user groups and District Forest Officers with regard to CF is essential to put decentralisation into practice.