Several years after the adoption of decentralization policy in Nepal, quality of education is still a concern. The purpose of this article is to discuss the role of school-based management for quality education in general, and the effect of transferring school management to local communities for the improvement of student achievement in particular. This paper employs document analysis as a method to explore school management issues, and discusses various opportunities and upsetting factors with regards to the transfer of school management to local communities. Nepal’s historical perspectives on school management, the government’s policy shift to transfer school management to local communities and student achievement results from the Government of Nepal’s National Assessment of Student Achievement (NASA) reports have been discussed. The findings reveal that student achievement has been stagnant, if not declining, in spite of considerable achievement in access to education after partialdecentralization of school management. The paper concludes that the process of policy reform should be driven by demands which can be ensured through participatory management of schools, a process that includes consultative decision making, accommodation of interests of diverse stakeholders and strong commitment of both school leaders and bureaucrats.