Reduction of emission from deforestation and forest degradation (REDD) has been proposed as climate change mitigation instrument in UNFCCC. This new mitigation approach with financial incentive generates queries about REDD’s livelihood implication in developing country. This study is to examine empirically whether REDD will be a better alternative or not. For this study, the community forest of Nepal is used. We use 48 household stakeholders data set collected from household survey in Kafle Community Forest of Lamatar-6, Lalitpur District, Nepal. This study finds that community forest contributes 45 percent livelihood income (fire wood, leaf litter, grass, water) to the forest dependent stakeholders, along with Service and Agriculture income sources. This contribution is distributed on the basis of labor contribution. This study further finds huge carbon income potentials. Annually, KCF can earn carbon income Rs. 39, 81,196, if KCF enters in REDD. It is 41 times higher than the present mean income Rs 24, 549.55 from forest products sale. In mixed familiarity about REDD, the study finds only 44 percent households expecting that REDD will be a better livelihood alternative to the poor. 63 percent responds need and use of carbon income for livelihood objectives. From estimation, household stakeholders who have good asset holdings (land and Rlivestock) think that REDD will be not a better livelihood alternative to the poor. However, the household stakeholders who have literacy, different food sufficiency level, land holding (1>), different earning per day, Rsex, per day earning and age think that REDD will be a better alternative. Thus, the poor households expects livelihood role from REDD in Nepal. Therefore, REDD should be more beneficial to the poor household stakeholders and their livelihoods.