Abstract: In March 2001,the participatory research and action on forestry held one forum on forest resources management in transfer term in Yunnan Province,which is one open forum.Among over 40 participants attending this forum,there were officials from governments,researchers from different institutions and universities,local farmers from different rural areas.They exchanged diversifying ideas and opinions on forest resource management during the special term-transferring term.The authors,attended this activity too,learned and drawn some basic conclusions from this meeting,under the basic guideline of these conclusions Xizhuanghe watershed-one middle mountainous watershed-was selected as one case for forest resource management study.In terms of forest resource management under the unit of small-scale watershed,differentiate forest management is one effective method.Local officials and residents should make full use of the good chance during the Development of Western China,through natural forest conservation and converting slope farmland into forestland and grassland,increasing the participatory capacity of local residents.Finally,enhancing the forest management capacity and sustaining the society,economy and environment development in Xizhuanghe watershed.