Nepal’s Community Forestry Program is a sustainable forest management and livelihood enhancement program reformed from earlier programs of the previous century. The government’s initial policy was to provide the basic forest resources to local communities through their active participation in forest improvement and management. Nepal’s policy and development program was based on sustainability concepts. Community forestry can be sustainable and produce socially, economically, and ecologically beneficial results. A number of both qualitative and quantitative options have been applied to measure the sustainable use of forests and other natural resources in community forests, but classifying the results is challenging. Policy-makers, experts, and the communities should be involved in developing and improving criteria and indicators for community forest management, reflecting the diversity of perspectives that must be accounted for and the increasing worldwide demand for sustainability and governance. The main findings were that sustainability can be measured with numerous tools, but there are several challenges. A literature review revealed that nationally and internationally defined criteria and indicators have not been extensively applied in Nepal due to lack of technical and other expertise.