The majority of communities living in rural areas of Tanzania depends on natural resources in particular forests and woodlands for their livelihoods. As a result forests and woodlands have been under pressure with declining tendencies in terms of their cover in many parts of Tanzania. Apart from their potential in supporting community livelihoods, forests also contributes to climate change mitigations by reducing carbon emissions. Few remaining forests if well managed can effectively support communities in a number of ways including carbon trade if REDD initiative is well implemented. It therefore very crucial to investigate the dynamics of landuse changes over time and possible implications to community livelihoods to forest depended communities within the context of REDD. The present study investigated landuse change over time at Mgori where PFM involving a total of 5 villages is involved. The study also established that woodlands decreased by 53.8% within a period of 10 years from 1990 to 2010 on the expense bushland which increased by 22.9%. In general agricultural land also increased by 4.8% and this was linked to expansion of crop land due to much dependence on community livelihoods by between 65 and 70%. In general the area is potential for REDD project because of the presence of woodlands, experience of communities on forest governance under CBFM as well as realizing various opportunities REDD may present which are more than challenges. However much more effort is needed to ensure that communities are well educated on potential benefits associated with REDD.