This paper investigates how Community Based Forest Management (CBFM), when overlaid on pre-existing economic and social structures, affects rural vulnerability. Drawing on the environment entitlements and endowments framework, we analyzed the case of Ngare Ndare forest in North-Central Kenya through interviews, focus group discussions, map analyses, archival records and a semi-structured household survey covering 120 households across six villages. The findings illustrate how socio-economic differentiation is embedded in the historical political economy of allocation, alienation and dispossession of land and forest, which are key endowments that distinguish people in the study area. Rather than reducing it, CBFM increases vulnerability of disadvantaged groups, through two mechanisms: i) taxing access to livelihood-enhancing forest products by the state agency, and ii) elite capture of local level institutions which serve to mediate forest access. Vulnerability can be addressed by reducing revenue extracted for forest activities such as firewood collection and grazing, ensuring democratic representation in local level forest institutions, and reducing structural inequalities in access to land and forest.