This study assessed the impacts of Collaborative Forest Management (CFM) initiatives on forest status of Budongo Forest reserve in Uganda and perceptions of the participating communities on the contribution of CFM towards their livelihood. Impact on conservation was assessed by applying a Participatory community based Forest Resource Assessment (PFRA) method to examine population structure, dynamics, and incidences of human disturbance across two forest compartments under CFM and comparing these with the status in two compartments without CFM, but otherwise similar to the former in terms of forest type, history of resource use-patterns, silvicultural management practices and location (in the production zone of the forest and close proximity to local communities). Impact on local livelihoods was examined through a survey that involved ten focus group discussions and semi-structured interviews among 140 randomly selected forest neighbours. With the exception of tree regeneration, CFM improved forest status in terms of more live stems of timber, pole tree species, trees with harvestable logs, merchantable volume, and lowered incidences of human disturbances. However, local people do not perceive CFM to have contributed to their livelihoods because whereas CFM created opportunities for income generation particularly through bee keeping, the in-forest activities it halted were superior sources of livelihood. As a result, nearly 50% of the respondents explicitly reported dissatisfaction with the CFM arrangements. Other reasons for dissatisfaction included the inability of CFM to deliver benefits as promised in the signed agreements, local people were frequently not consulted or involved in making key management decisions, and inequality in sharing CFM benefits amongst members of the local community. CFM at Budongo forest reserve has thus contributed to improving forest status, but is perceived to have had limited benefits to local livelihoods.