This study was carried out in Wards 3 and 4 of Shaktikhor Village Development Committee (VDC), which forms a bottleneck in the Barandavar forest that connects the Chitwan National Park with the Mahabharat Range (mid-hills) in the north. The intent was to analyse the Chepang indigenous community, their dependency and pressure on the forest, their traditional management methods, the potential for community-based forest management and other related issues. The study method included open-ended interviews with four District Forest Office (DFO) staff, 15 key informants, a socio-economic survey of 250 households, data collection on household consumption of forest products and an analysis of land cover changes from the years 1970 and 2000. Chepangs were found highly dependent on a forest whose area has decreased by 12%, resulting in a reduction in species used by the Chepang for their livelihoods. Economic development based on non-timber forest products (NTFPs) has potential to decrease forest dependency and help conservation but the oligopoly (a limited number of suppliers and sellers) nature of the market, policyrelated problems and limited DFO technical staff has prevented people from enjoying NTFP-based economic benefits. The Chepang traditional management practice was found to be environmentally friendly but at times of increased population pressure on the forest these traditions broke down. Lack of trust between Chepangs and non-Chepangs, and the absence of mediation from the DFO obstructed the formation of community organizations to manage the forest.