Community-Based Forest Management (CBFM) has been implemented since 2001 in Indonesia involving timber-state enterprise and local communities in order to achieve the sustainable use of forest resources. The objectives of this study are to investigate the determinant factors affecting people’s participation in the CBFM program and and to investigate the determinant factors which led to CBFM participants’ perception about CBFM impacts. A survey was conducted with total of 210 respondents in five villages in Malang, East Java, Indonesia. Logistic regression results showed that at the 5% of significance level, years of farming experience, number of family who work on farm, the practice of agro-silvopasture and income derived from forest positively influenced people’s participation in CBFM, while size of private land ownership and income not derived from forest had a negative association with people’s participation. Results from ordinal regression and the discrete change in the probability indicated that CBFM participants’ perceptions regarding environmental benefits of CBFM such as reduction of illegal logging and maintaining of Sustainable Forest Management (SFM) were positively affected by both socio-economic characteristics (farm ownership, age, education) and knowledge (meetings, trainings, awareness of being CBFM’s members). Those who had a positive perception about the economic benefits (increasing of household income) of CBFM were influenced by both knowledge (meeting and awareness of sharing benefits) and dependency on forest (income derived from forests). From these results, it can be said that knowledge is a vital component in affecting people’s perception of CBFM, both on environmental and household income benefits.