Forests are viable tools in combating the impacts of climate change, as they are capable of sequestering atmospheric carbon and storing it in different pools. This study aimed to examine the carbon sequestration potential of community-managed Shorea robusta (Sal) forest and assess the practices that have the potential to reduce adverse climate change impacts, thereby improving the livelihoods of forest-based communities. For this, we obtained forest inventory-derived carbon data from 11 sample plots of Shorea robusta (Sal) forest, analyzed them using allometric equations, and estimated the carbon storage and climate change mitigation potential of these forests, while focus group discussions and desk review of secondary information were employed to investigate the adaptation potential. The results show that the estimated biomass density of the selected forest is 352.46 ± 63.79 t/ha, whereas the carbon stock density is 165.66 ± 29.98 t/ha and the CO2 equivalent is 598.07 ± 110.48 t/ha. The study further revealed that community forest management, as a successful model of participatory forest management and community forest user group (CFUG) as a resourceful local institution, has been playing an important role in the diversification of livelihoods and income opportunities, social cohesion and thus climate change adaptation through collective actions. The adaptation and mitigation of climate change impacts have been prioritized in the operational plans of the CFUGs. Through the promotion and prioritization of alternative energy, agroforestry and enhanced livelihood options, the CFUGs are committed to the sustainable management of forest resources and to enhancing the livelihoods of local communities. This study indicates the relevance of community forests as a priority institution for the implementation of Local Adaptation Plans for Action (LAPA) and support National Adaptation Program of Action (NAPA) to combat climatic impacts, providing important information for planners and policy makers in Nepal and elsewhere.