Forestland allocation (FLA) policy in Vietnam aimed at conserving forests and improving local livelihoods. In regard to the effectiveness of FLA, some authors reported improvements in forest cover and quality, whereas others stated inappropriate implementation process and minor impacts on household income. Hence, this study examined whether disturbances in initial stage still existed, how allocated forestlands were utilized, and how FLA contributed to local livelihoods under different forest management regimes. D village of Nam Dong district, where FLA was introduced in 1995, was selected as a case, and 78 households were randomly selected for household interviews. The results revealed that shifting cultivation, once widely reported in mountainous regions, had already ceased before our survey. Natural forests allocated to groups were mainly utilized for non-wood forest product (NWFP) collection, regardless of whether those users had an allocation. Individually allocated areas were converted to acacia and recently to rubber plantations. The rotation of acacia plantation was five to seven years with intercropping cassava in the initial stage. FLA contributed to adjusting an uneven distribution of farmland and income, but the effect remained nominal. The role of FLA in income generation was limited due to small allocation area per household (1.50ha on average). Switching to rubber trend was another reason of limited income derived from FLA. Therefore NWFP played a more significant role in the household economy than plantation yields. Investment in livestock was first preference of respondents, which suggests the importance of small-scale livestock rearing in the areas facing land shortage.