The incidence of conflicts among communities over the collection of Yarsagumba, the high value caterpillar fungus, has increased after the Government of Nepal has lifted a ban on its collection and trade in 2001. In most cases, conflicts over Yarsagumba harvesting persist either between locals and outsiders, or between collectors within a local community. In the Api Nampa Conservation Area in Darchula District, Nepal, conflicts are primarily caused by the competition for control over resources. The rights of the indigenous Shauka community(migratory herders), the Api Nampa Conservation Authority, and the non-Shauka communities of lower villages are at odds due to a lack of clarity, and the absence of coordination regarding the access to resources in the landscape. The Shauka community has restricted the Yarsagumba collection by ‘outsiders’ to specific and limited areas of their community forest and traditional grazing land. The lowland, non-Shauka community who are dissatisfied with the restrictions have excluded the Shauka people from the utilization of their winter pasture for animal grazing possible through the introduction of a community forestry programme. In this conflict, both communities suffer as the migratory lifestyle of the Shauka has been adversely affected, and earnings of the lowland community from Yarsagumba collection have been reduced. This is a no-win situation. Our study suggests that the Government of Nepal should prepare a national Yarsagumba management policy and local Yarsagumba management guidelines to address conflicts by clearly defining the roles, responsibilities and rights of local institutions and actors, while ensuring the provision of particular services in the community forestry programme to distant and seasonal users.