This study analyzes the sustainability of community forest management, representing four forest types of two physiographic region Hills and Terai of Nepal. We assess the sustainability based on species composition, stand density, growing stock volume, and growth-to-removal ratio using inventory data of 109 permanent forest plots from four consecutive intervals of three to five years. In addition, forest users, forest committee members, and forest officials were consulted. We observed increment on the representation of economically valuable tree species in all forest types of both regions. The pole-size tree dominates in all forest types with declining number of trees and regeneration. In case of Hills forests, they were over-harvested until 2013 but were under-harvested in the recent period. In contrary, forests were under-harvested in the Terai. We found that ecological objectives of sustainable management are fully achieved while economic benefits remained unharnessed where harvesting is far below the growth. We conclude that maintaining a large number of trees may contribute to ecological but not on economical sustainability. We argue to rationalize annual harvest in all categories of the forest to enhance resource conditions together with regular benefits to the local communities.