There has been an upsurge concerning the concept and application of “co-management” in the governance of natural resources in Bangladesh in recent years. Notwithstanding the popularity of co-management, however, the overall approach to implementation has been overtly technical in nature; and there has been limited attention to sustainability dynamics. This article aims to explore aspects policy and practice withinco-management based on several purposely selected cases in the coastal forest zones of Bangladesh. It also identifies the major challenges and issues concerning its sustainability. The lessons generated by this study may be relevant to both policy makers and practitioners. A qualitative research approach was adopted with empirical data collection methods including key informant interviews, focus group discussions, documentary research, and unstructured personal observation. The article begins with a recapitulation of the concept of co-management and its associations with sustainability, followed by an overview of the major co-management practices in Bangladesh. The discussion subsequently raises lessons learned and key issues relating to sustainability, including: the need for sorting out land-related tenurial complications and institutions used in co-management; unequal awareness of the concept of co-management and varying levels of participation of community organizations; the political interface and accountability of co-management institutions; issues of “ownership” at the community level; and the role of “external” support and facilitation. As a recently developed concept and practice, co-management seems to be rapidly taking root and displaying signs of gradual consolidation in Bangladesh. Considerable progress has been made in terms of required policy and legislative reforms, community level institution building, and a degree of change in the mindset of the government agencies to accommodate and nurture co-management. However, numerous issues (e.g., tenurial rights, effective community participation, equity, political dynamics, adequate financial support, accountability, and transparency) still need to be resolved if sustainability is to be fully achieved and satisfy the hopes and needs of local communities both now and in the future.