Community-based forest management (CBFM) is seen as an alternative to protect forests and at the same time to provide income for smallholders. Since the mid-1990s, the number of CBFM projects has rapidly increased in the Brazilian Amazon although most of them still face several difficulties despite significant public support. Five CBFM projects, located in the states of Pará (eastern Amazon) and Acre (western Amazon) were analysed between 2008 and 2010. These cases highlight some main barriers threatening CBFM long-term financial viability with effects on cash income received by communities from timber harvesting. Moreover, despite external ? national and international ? financial support as well as technical assistance, timber harvesting only accounts for limited cash income for smallholders, even though forest covers 80% of their landholding. The disparity suggests that it is necessary to invest in researchdevelopment activities to support other land uses, such as sustainable cattle ranching and agriculture, as part of household livelihood strategies on the 20% of the total landholding that can legally be deforested. Market access for timber is very uncertain and smallholder communities often do not succeed in selling their timber at remunerative prices. Minimum remunerative public prices and support for timber marketing need to be provided to make CBFM a truly economic alternative. The complex and cumbersome legal framework results in relatively high transaction costs for permit approval. Thus, more simple and flexible procedures are required to enhance smallholder involvement in legal forest management for commercial purposes. Finally, the timber potential in smallholder forest reserves is largely unknown. Given the large initial fixed cost for formulating, submitting, and implementing a collective forest management plan, a better assessment of such potential through systematic inventories is needed.