This study deals with forest management from the perspectives of local knowledge and rninstitutions in relation to the livelihood of local people with particular reference to Balate Gera Forest Priority Area of Jim a Zone, Oromia Regional State, Ethiopia. rnBy using material from Ganji-caalla ofGera district, the paper attempted to address the role rnof local knowledge and institutions in forest management in relation to livelihood of the local rnp eople. The study was based on the field research conducted in Gera district for two solid rnmonths ranging from 21 December 2009 to 21 February 2010. Different tools of data rngathering mechanisms were employed: structured and unstructured interviews, focused group rndiscussions, observation and survey were utilized in order to obtain relevant and reliable rndata. The data were analyzed qualitatively employing conceptual ji-ameworks of political rnecology and common property theories. rnThe qualitative analysis of the study revealed that knowledge of local people about the values rnof fo rest and forest management was incredible. They were well aware of ecological, rneconomic and socio-cultural values of forest in the study area. The study also indicated that rncustomary institutions of the local people have played a great role in forest management. In rnthe study area, the experience of charcoal burning, cutting live trees for fire wood, and rnextraction of timber were very minimal. However, local people have been utilizing forest rnresources for subsistence domestic uses cautiously and selectively. Traditional leadership set rnups such as abbaa lagaa and shanee were still active and played great role in resource rnmanagement and other social affctirs like conflict resolution. Above all, findings .!i'Â·om this rnstudy implied the importance of considering existing customary institutions, respecting rnownership rights of forest resources users and reducing the role of government to technical rnsupport and some aspects of administration for sustainable forest management. Future rnresearches should be directed to how the existing customGlY institutions will be fostered into rnfo rest management institutions in collaborating with the local government institutions and rnnon-governmental organizations that have interests to work with the local people respecting rntheir customary institutions.