This study, conducted in fire‐prone dry deciduous forests of Ajodhya and Susunia hills, aims to assess the diverse impacts of forest fire events on vegetation health, soil nutrient balance, and availability of nontimber forest products (NTFPs) that conjointly modulate the livelihoods of local communities. Vegetation health and soil nutrient pool were assessed through transect sampling at both fire‐affected (FA) and fire‐unaffected (FU) forest plots of the study area. Two depths (D1: 0–15 cm, D2: 15–30 cm) were considered for soil sampling. Vegetation parameters like basal area, canopy cover, above‐ground biomass, species diversity, and tree density were significantly lower (p < 0.01) in FA compared to FU. Organic C and available N were significantly lower (p < 0.01) at D1 of soils in FA than in FU. Significant differences were found in organic C (p < 0.01), available N (p < 0.001), and available P (p < 0.01) contents of FA and FU plots at D2. Participatory appraisals conducted among the neighboring forest‐dependent communities indicated that almost every forest fire event was human‐induced. These adversely affected extraction of Shorea robusta leaves, fuelwood, wild mushrooms, Madhuca indica fruits, etc. Conversely, Diospyros melanoxylon leaf production increased after 2–3 weeks of fire due to clearing up of hitherto untapped forestlands. Cumulatively, this study uniquely attempts to contextualize the environmental impacts of fire with its socio‐economic ramifications as evident from degrading natural resources, scarcity of essential NTFPs, and escalation in number plus intensity of human–animal conflicts.