This article reflects on experiences of a 5-year participatory policy learning and action research (PLAR) project that aimed at strengthening local-level capacities to develop and formalize bylaws for effective natural resources management (NRM) and governance. The PLAR involved a top-bottom-up iterative process of social learning and experience sharing, policy dialogue and negotiation, and adaptive management that resulted in the formulation and formalization of a set of bylaws regulating soil erosion control, tree planting, animal grazing, bush burning, and wetland management. This article describes the participatory bylaw reform process and analyzes the mechanisms for bylaw formalization and enforcement. This experience suggests that with appropriate catalyzing, rural communities have capacities to develop their institutions, skills, and networks for participatory NRM governance. A companion article (this issue) discusses the results of a postproject tracking study on the outcomes and the conditions for sustainability and uptake potential of community bylaws reforms.