Research into contextual aspects of Participatory Forest Management (PFM), such as institutional structures, forest policies and socio-economic developments, are important, although they have hitherto been limited in scale. This study focuses on the perception of the socio-economic development of the local people, such as PFM-based income, contribution of this income to living standards and the constraints associated with the overall implementation of the program. To meet the objectives of the study, interviews were conducted with 99 household heads. While all of the interviewees were non-participants before initiation of the PFM program, some later became active participants. The important findings of this comparative study between participating and nonparticipating respondents were: lifestyles were affected by these forest developments and the income of participating respondents increased substantially more than that of non-participating respondents which, in turn, had a positive influence on living standards. Approximately one third (31.3%) of respondents were participating in the PFM program as a result of a lack of what they perceive to be proper conservation policies and incompatibility between forest policy and their own goals. The PFM program in Bangladesh may act as an effective strategy for sustainable socio-economic development for local people by ensuring proper usufruct rights and encouraging grass roots participation.