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This paper examines the role and effectiveness of locacal institutions in the management of forest biodiversity in New Dabaga-Ulongambi Forest Reserve, Tanzania. Data were obtained through questionnaires, interviews, focus group discussions, participatory rural appraisal and field observations. The study revealed that the most remarkable local institutions connected to forest biodiversity management include： Village Natural Resources Man- agement Committee （92%）, tree nursery group （79.4%）, beekeep- ing groups （61.1%）, fish fanning （43.3%）, livestock rearing group （33.9%）. Main activities carried out by local institutions which directly contribute to the sustainability Of forest reserve include： forest patrols, fire extinguish, preparation of fire breaks, plant- ing of trees along the forest boundaries, creation of awareness, arresting of forest defaulters, participation in income generation activities. For the purpose of realization that local communities are capable of managing forest biodiversity through their traditional institutions, the policy should provide tangible opportunity for local communities to meet their needs as they manage the forests.