Livestock grazing restrictions are a common practice in the protected areas of developing countries. Understanding the influence of these restrictions on livestock husbandry is critical because local people's livelihoods often depend on access to grazing lands and biodiversity conservation may be affected by grazing activities. Household surveys and government records were used to examine impacts of grazing restrictions on livestock composition and use of available forage resources in the Madi Valley of Chitwan National Park (Nepal) during early (1997) and late (2006) restriction policy periods. Households responded to grazing restrictions by reducing numbers of less productive cattle and high maintenance buffalo to offset forage demands, but there was no decrease in the number of goats. In 2006, average household fodder biomass (3.4 t yr−1) available from agricultural land was adequate for the average household livestock units (3.3 t yr−1) requirement. Although most households ‘stall fed’ livestock as an adjustment to the new policy, about 30% still depended on community forests and parklands for livestock rearing. Higher ‘stall feeding’ reduced grazing pressure and increased forest cover but demanded more fodder cutting, which has the potential to increase human/wildlife interactions, particularly with tigers in the buffer zone community forests.