The recently established Kanchenjunga Conservation Area Project (KCAP)—jointly managed by the Department of National Parks and Wildlife Conservation (DNPWC) and World Wildlife Fund (WWF)—is based on the principles of the new participatory concept of nature conservation. The main objectives are to protect the unique environment of the Kanchenjunga region and to help local communities improve their standard of living. This study focuses on existing livelihood strategies and local institutions as well as on the local population's perception of the participatory approach. A theoretical consideration of the different concepts of nature and conservation is regarded as helpful in understanding locally observed processes. The results show wide diversification in the economic system that contributes to sustaining livelihood. Various local institutions have established governance over particular resources. With regard to the KCAP, it became obvious that nearly all interviewees had expectations that went far beyond the intended and economically feasible potential of the project. This is largely because they do not entirely comprehend the principal aim of “conservation.” On the other hand, most of the local people believe that conservation of nature is necessary in their region and that it is only possible through a joint effort made by everyone in the community.