In Nepal, nearly half of the total land is covered by forest, which holds a potentially important position in promoting rural livelihoods and in alleviating rural poverty. The rural landscape that encompasses an agrarian economy, a fragile ecology, and a complex and differentiated society is changing rapidly in Nepal today. Although poverty alleviation has been one of the top priorities for national development since 1976, poverty still remains widespread, persistent and it is also an acute problem in Nepal, where people are in a state of deprivation with regard to incomes, clothing, housing, healthcare, education, sanitary facilities and human rights. Thus, Nepal is considered as one of the poorest countries in South-Asia, with 25.2% people living below the poverty line. The objective of this study was to assess changes in poverty of forest users brought on by the community forestry program, in order to analyze the level of participation in community forestry management activities. For this study, Bajhang district was chosen as the study site, which is one of the poorest and most remote districts in the country of Nepal. Different Participatory Rural Appraisal methods such as face-to face interviews, focus group discussions and key informants’ interviews including secondary data were used to gather information. The findings showed that the forest users’ participation in meetings, discussion and other activities, like community forestry management or silvicultural operation related to community forestry, was high. The assessment found that 42.3%, 32.6% and 25.1% of respondents strongly agreed, agreed and were neutral, respectively, towards the idea that poverty reduction from community forests had occurred. The results showed almost all the respondents were depended upon agriculture and/or forest resources for their livelihoods. Different ecosystem services such as ethnomedicines, aesthetic value and ecotourism, control of soil erosion/land-slides, water recharge and soil fertility have increased due to the decomposition of leaf litter. This was apparent from the formulation of community forests. Poverty in rural areas of the country is still higher than in urban areas and the incidence of poverty is the highest in the Far western Province where this research was conducted, Therefore, the government, policy makers and other stakeholders should work hand-in-hand to effectively reduce the poverty that persists in Nepal.