The aim of this paper is to examine the current status of Community Forestry (CF) in the hills of Nepal and its impact on broader social transformation process. To explore the current status and impacts two Community Forestry Programme (CFP) implemented hill districts were selected for the study. Research methods like focus group discussion, key informant and semi-structured interviews, transacts, social and resources mapping, time line were used in the study. Both primary and secondary information were used to analyse the contribution of CFP on social transformation. It is revealed that the CF in the hills of Nepal is greatly contributing for social change and transformation through institutionalised Community Forestry Users Groups (CFUG). CF has demonstrated the appreciable success despite some limitations and the problems faced. The contributing variables for social transformation used in this study are equitable, gender-sensitive, empowerment-led and poverty-focused outcomes through participatory decision making process, raised awareness on multifunctional use, economic and ecological contributions of forests and roles and responsibilities of users, well functioning of forest users groups, representation of poor and women in forest management and utilisation and sustainable management of natural resources and bio-diversity. These all indicators demonstrate that the broad social transformation is achievable through effective CFP.