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An important and progressive part of the forest policy regime in the Lao People’s Democratic Republic (PDR) is its land and forest allocation program started in 1996, which contains critical elements that delegate the rights of land and forest use to local people. This study aims to analyse the gap between the initial concept of the program and its actual implementation by local forestry officials, analyse its relevance and impact on the local people, and discuss several issues with the program that need addressing in order for it to function more effectively. A case study was done by conducting interviews, gathering data, and doing field observation in the hillside areas of Savannakhet Province, which is in the southern part of the country. It is evident that much fewer agricultural land allocations have been conducted under the program than originally intended and that, in reality, land-use management designations are rarely acknowledged by the local people. The program hasn’t greatly affected their traditional land- and forest-use practices, since they have tended to continue cultivating their land as they always have. Despite these shortcomings, the land and forest allocation program has achieved several significant outputs to date: (1) land-use rights have been clarified since the boundaries between villages were fixed, and (2) the conversion of land use from swidden fields to paddy fields has been accelerated. At the same time, land-use pressures on the land and forests in the study area are still relatively small because of the local people’s sustainable land- and forest-use practices. In terms of forest management of the hillside areas of Savannakhet Province, it is realistic that these local practices should be officially sanctioned on condition that forest management capacity of the local forestry authorities is still not enough.