Changes of conservation policy from fortress to community conservation aimed at balancing sustainable conservation and rural livelihoods. However, little is known as to how much Community Based Forest Management (CBFM) approach contributed to livelihoods enhancement. Similarly, impacts of wildlife conflicts as a result of successful conservation, and causes of poverty among local communities are poorly known. This study aimed at assessing poverty traps and wildlife conflicts in Mgori Village Land Forest Reserve. Specifically, it assessed people’s livelihood assets and the way institutions modify access to the assets, the extent of wildlife conflicts and its link to poverty. Both qualitative and quantitative data were collected. Ninety seven households were randomly selected from three villages. Content analysis was used to analyse qualitative data while SPSS computer software was used for quantitative data analysis. There was reduced access to livelihood assets especially natural assets. Respondents (60%) felt that they subsidised more than they benefit from the forest revenues. Household income sources were: agriculture 54.1%, environmental income 5.6% and non-farm and off-farms contributed 40.3%. Forest use was mainly for fuel wood and non wood forest products. The total household income increased with increase in agricultural crop sales and the relationship was significant (P<0.01). Environmental income reduced income inequality whereby the Gini coefficient without environmental income in Mughunga, Ngimu and Pohama increased to 0.1, 0.01 and 0.01 units respectively. The overall Gini coefficient decreased to 0.08 units. Community’s perception on CBFM towards poverty reduction was negative. Wildlife conflicts were reported by 87.6% of respondents, among them 58.1% of the respondents indicated the extent of conflicts as high, 27.9% medium and 10% as low. Therefore, this study recommends for compensation mechanisms to prevent local communities from falling into abject poverty. Practical implementation of participatory forest management policy to address clear benefit sharing patterns is inevitable.iii DECLARATION I, ANDREW INNOCENT MWAKISU do hereby declare to the SenateEKOSIASA Project