Community participation in the governance of school systems is a recurrent theme of educational reform in developed and developing countries alike. This article analyses the effort of one developing country – Nepal – to promote broader participation in educational decision-making through local school governance structure. It looks at how the current policy creates spaces for community participation in school and the extent to which a gap exists between policy intention and policy implementation. Drawing on the case study data, this article suggests that while the policy has created legitimate spaces for community participation in school, participation in such spaces is taking a form of tokenism, and the community represented in school governance is restricted to a small number of political elites. Given that ethnic, cultural, linguistic and socio-economic characteristics of the local populace, problems exist within the school system to embrace differences and diversities that prevent a majority of parents from effective participation in school. This article concludes that along with the structural reform, participation can be reinforced by developing a long-term strategy to build community capacity for the provision and management of education, as well as by preparing educators to work effectively with parents of different socio-cultural backgrounds.