Wide acceptance of sustainable development as a concept and as the goal of forest management has shifted policies from a traditional to people oriented approach. Tanzania mainland is exercising Participatory Forest Management (PFM) since 1994 aiming at protecting the forests from unplanned exploitation, making the forest products and services available while preserving the ecosystem, hence contributing to sustainable development and alleviating poverty. Today about 9.5% of the country’s forests and woodlands are under PFM programme. This study aimed to analyse the impact of PFM on vegetation attributes in Monduli forest reserve and livelihood of the adjacent communities. Forest assessment was done through 56 sample plots laid down randomly, while socio- economic survey was conducted in 74 households. Generally, the study showed that involvement of local people is the reliable management tool in reserved forest areas. However, long term support of the people is fundamental. Findings indicated that, forest condition is now better than when under non-PFM situation. Average number of trees has increased from 311±43 to 1156±111 in 1999 and 2006 respectively. Mean basal area has also increased from 27.1±2.5 m 2 ha -1 in 1999 to 37±4.7 in 2006. On the other hand, PFM showed to have no significant contribution to the average volume as the 346±68.78 m 3 h -1 observed in 2006 was low compared to 393±47 m 3 h -1 recorded in 1999. As regard to livelihood, the study revealed that, PFM have less contributed to the livelihoods of the forest adjacent communities. However, PFM has contributed to stabilisation of the resource base for various livelihood activities such as, forest pasturage/fodder; availability of herbal medicine; and use of brush wood both as fuel and for household needs. The study recommends for local communities to have more sufficient incentives to properly participate in PFM initiatives.The Royal Norwegian Government