The participation of beneficiaries in development programs is widely seen as a potential means for empowerment and inclusion of socially marginalised peoples, and democratisation of the grassroots. International development agencies such as the World Bank and the United Nations Development Program, and critics of conventional centralised 'top-down' development approaches, emphasise the role of participatory practices in social transformation through inclusion and empowerment. However, some empirical studies scrutinising the unequal power relationships between external development experts and marginalised peoples in participatory development processes, point out the potential risks of strengthening unequal power relationships, despite the emphasis on empowerment and inclusion. A key research gap was identified: that the experiences of the socially marginalised people themselves, who have increasingly been involved in participatory development programs are generally underexplored in development research. This research set out to examine whether participatory development programs targeted at socially marginalised poor communities of Nepal did in fact contribute to their inclusion and empowerment. A qualitative multiple case study research design was employed in three highly marginalised rural poor communities-Madhesi Dalits, landless fishers' community (Fishers), and Chepangs of South-Central Nepal. An actor-oriented perspective and social interface analysis approach was adopted to comprehend the marginalised peoples' experiences of development interventions in their particular contexts. The case study methodology involved in-depth interviews, focus groups and observation. The study findings showed that various state and non-state agencies have increasingly adopted and promoted participatory approaches and invested resources for the socioeconomic development of marginalised peoples; however, the equity and empowerment implications of these efforts for the local communities were limited. Collaboration of marginalised peoples' organisations with external development agencies, particularly non-governmental organisations (NGOs), provided opportunities for them to access development resources, engage in networks and develop leadership. On the other hand, NGOs also contributed to the 'professionalisation' of community organisations by valuing leaders with professional or academic knowledge, rather than those with indigenous wisdom. In several instances NGOs advocated on behalf of those they considered 'ignorant' people and displaced them from their prior collective participation in social struggles against systemic discrimination and oppression. Interactions of community groups with NGOs led to the co-option of community leaders, creating elite groups and turning them into local brokersa different social categoryrather than facilitating their roles as active agents to encourage grassroots mobilisation for social transformation.