This study assessed the effects of institutional changes on forest condition, stakeholders’ interests, the performance of local institutions and factors influencing the performance of local governance structures, using a case study of Chenene Forest Reserve (CFR) in Bahi, Tanzania. Data were collected through forest inventory using 120 systematically selected sample plots. Satellite images were collected and analysed using Remote Sensing and Geographical Information System techniques. Participatory Rural Appraisal (PRA), focus group discussions (FGD), key informants and questionnaire survey were used to collect data on socio-economic factors. Quantitative data on forest condition and forest governance were subjected to descriptive and inferential statistical analysis, while qualitative data were analyzed using content analysis. Logistic regression model was developed to analyze factors influencing performance of local governance structures. Nine areas of conflicting interests that occurred among stakeholders were identified which were routed in institutional and socio- economic perspectives. The study showed that the performance of Village Environmental Committees (VECs) in governing forest resources had improved. The inventory carried out in 2011 revealed that, an average number of stems per hectare (N), basal area per hectare G (m2ha-1) and volume V (m3ha-1) were 199, 1.71 and 6.46 respectively. The low parameters in wood-stock were due to massive exploitation and other human disturbances in the past. The tree diversity of 4.0 was recorded which was in line with other past studies on dry miombo woodlands. Results on forest cover changes revealed that, the forest condition had improved by 2 576 ha at the rate of 0.50% after decentralization of CFR. Socio-economic factor that significantly influenced most of the performance of local governance was found to be education level. The study concludes that, institutional change reforms on forest management are one of the best options in improving forest condition and forest governance. The study recommends that, monitoring studies are needed in order to have comprehensive understanding on implications of institutional changes on forest resource condition and forest governance.Institute of Rural Development Planning.