The importance of indigenous knowledge, as well as the needs to better recognize the rights of indigenous peoples in managing their areas and natural resources has been widely recognised. It is often assumed that better recognition of the rights of indigenous peoples would automatically lead to more effective management of natural resources and livelihoods improvement. However such efforts have often led to the exact opposite of what was originally intended and have resulted in resource overexploitation, inequity and dependency on external interventions. Based on our field observations and experience in Indonesia, this paper describes the causes of the failure, e.g. misleading interpretation of important terms (‘participation' and ‘local people'), imbalanced views between rights and responsibilities, and weak conceptual knowledge and practical skills of the project implementers. This paper also outlines key factors that should be included when promoting the rights of indigenous peoples, as well as specific knowledge and skills needed by project personnel.