Abstract: A study was conducted in Buddha Shanti Collaborative Forest Management (BSCFM) of Parasi district to assess the sustainability of the collaborative forest management approach based on existing socio-economic and ecological conditions. The sustainability index was calculated by using Criteria and indicators method. A household questionnaire survey (n=115) and Focus Group Discussion was conducted among the collaborative forest management user group (CFMUG) members to collect socio-economic data. Ecological data was collected through forest inventory. The results found that the overall sustainability index of BSCFM was 0.76 with the overall socio-economic and ecological sustainability index to be 0.75 and 0.77 respectively. This value indicates that the BSCFM is medium in condition socio-economically as well as ecologically with 75% and 77% likelihood of sustainability in social and ecological terms respectively. There is room for improvement in both the socio-economic and ecological aspects of BSCFM. In addition, the study also shows that criteria and indicators are useful tools for monitoring the efficiency and effectiveness of collaborative forest management programme.