In the context of limited research on Participatory Forestry's (PF) role in poverty reduction and development, this article sheds light on the relevant experience of a PF project called the Upland Settlement Project (USP) in the Chittagong Hill Tracts (CHT) region of Bangladesh. The study aims to develop a better and practical understanding of the impact and operation of the selected PF project with a particular reference to poverty reduction, where poverty reduction is manifested by three main dimensions: social development, good governance and pro-poor growth. The empirical research tools chiefly consisted of focus group discussions, (uncontrolled) ethnographic observations and unstructured interviews. The study concluded that the project activities have resulted in increased status and recognition of the farmers by providing them with the ownership of the land and by augmenting their income level. Alongside the direct benefits farmers also receive considerable indirect benefits e.g., social recognition. The project has also contributed to an expansion of tree coverage in the area and a reduction in soil erosion by adopting a number of soil conserving agroforestry practices. However, there are some problems related to the extension work and maintenance of community support services. A set of recommendations for improving the present practices of PF in the CHT has been made in this article.