Malaysia has been endowed with a beautiful tropical forest which provides various ecosystem services such as carbon dioxide absorption, water supply and soil stabilization to the community. It is also a timber source for wood-based industries generating RM22 billion in 2016. However, there are illegal encroachment activities in the forests causing the forests to be degraded as well as conversion of land use to agriculture. The enforcement activities carried out by the authorities have resulted in the degraded areas being reclaimed and the forest areas are being restored with planting of local species with commercial value. To date many degraded forest areas have been restored using different approaches. This paper aims at presenting Malaysia's experiences and initiatives in forest restoration and rehabilitation of degraded forests. These activities have created opportunities to improve the forest ecosystem. There are also many challenges need to be addressed in order the forest restoration and rehabilitation to be successful. These challenges will also be discussed.