This paper presents a case study of decentralized forest management in lowland Bolivia. Bolivia has undertaken important policy reforms since the mid-1990s aimed at institutionalizing popular participation and promoting democratic decentralization. In the forestry sector, municipal governments have received important responsibilities, and various mechanisms have been established to hold these governments accountable to local populations. Nevertheless, in spite of being one of the most advanced forestry sector decentralizations in developing nations, the democratization of decision-making is still limited, with local governments being primarily responsible for monitoring forest management and illegal activities, and promoting forest management by local users. The national government has retained the right to define standards and allocate forest resources. Still, the political environment prompted by decentralization has created conditions for local forest users and municipal governments to become stronger players in natural resources governance. Given this complex context, outcomes of decentralization are mixed, mainly as a result of municipal resources and capacity, local power relationships and the degree to which local economies depend on forest resources.