This study investigated the sustainability of combining forest grazing and timber harvesting with selection felling in a cool broadleaved community forest (CF) in Bhutan. Forest grazing and timber production are critical livelihood activities for many farmers throughout the world, so it is important to understand under what conditions the two activities can be combined. The study was based on a household survey to quantify livestock holdings and grazing patterns, a comparison of two forest inventories to assess forest structure and regeneration, and a study of stumps to quantify harvesting intensities. During a fivr year period the number of cattle grazing inside the community forest significantly decreased and the number of naturally regenerated tree seedlings and saplings significantly increased. There were no other changes in forest management practices during the period that would affect natural regeneration, and there were no significant changes in the volume of wood harvested or the volume/number of standing trees (with a diameter at breast height ≥10 centimeter). Therefore moderate intensities of forest grazing (0.4 cattle*ha−1) and timber harvesting (4.64 m3*ha−1*y−1) can be combined in this type of forest without negative impacts on forest regeneration. The findings support Bhutan's policy of allowing forest grazing in community forest.