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This study analyzed the causes of forest devastation, the characteristics of forest rehabilitation process, and the success factors of reforestation. And it reviewed the management of rehabilitated forest resources and identified the income sources of mountain villages in South Korea. The devastation of forest starting from the early twentieth century was continued to the 1950s. The main causes of deforestation were the illegal cutting of trees for fuel and the slash-and-burning agriculture in forest. The success factors of reforestation were the decrease in the dependence on forest of fuel source, strict administration system and national participation. Sustainable forest management could be made possible through the practical use of social issues like public work project for prevention of landslide damages caused by the thinned logs left in the forest. Also it could be possible by making people realize that the public benefit was obtained from forest and the income sources of mountain villages were supplemented by non-timber forest products and tourism. Food and Agriculture Organization indicated Korea as the country that forestation was succeeded in a very short period. Korea seems to be not ordinary because economic growth was accomplished with rehabilitating natural environment. Korean forestation can become a good prototype of combining environmental rehabilitation and economic development.