Community-based forest ecosystem management includes ecological, economic, and social dimensions. Currently, a good interaction and relationship between forestry management and local community has not been established, which has brought about many social problems. These problems include the environmental groups’ opposing all forest management practices and the National Reforestation Campaign, aborigines’ claiming ownership of the land, declining local economy in mountain areas, and increasing conflicts and confrontations between local farmers and forestry organizations. The objective of this research is to study the potential community forestry of Liu-Kuei experimental forest and design a development mechanism in order to enhance public participation and establish partnership, as well as to improve economic benefits for the aboriginal tribes for stabilizing their lives, and to obtain win-win between the local communities and the forest institutions. The research has conducted 200 household in-person interviews in Liu-Kuei township and 125 household in-person interviews in Mau-Lin township. Several important results have been achieved. First, the interaction between communities and forestry organizations still has a lot of room to be improved. Second, regarding the interaction between forestry organization and community, the option, “providing employment opportunities to the communities/ tribes,” solicits most votes, which reflects real life demand of the aborigines and non-aborigines and is worth taking into consideration for forestry policy making. Third, as for the issue on how to manage the forests around the communities in order to help community development, the option, “developing ecotourism,” has gained the highest assessment. Fourth, the community development association has received the highest evaluation as the most suitable group to participate in the community forestry program. Fifth, the expertise of researchers at Taiwan Forestry Research Institute has been approved by most of the community people. Finally, the importance of applying traditional ecological knowledge on forestry management will increase in the future.