Protected areas in developing countries have been in a dilemma between biodiversity conservation and improvement of local livelihood. The study aims to examine the sustainability of India Ecodevelopment Project (IEP) in Periyar Tiger Reserve (PTR), Kerala, through analyzing kinds of financial mechanisms that were provided by the project, how IEP had been implemented, and what kind of changes emerged in the behaviors and perceptions of local people. The results of secondary data and interviews with key informants revealed that organizing people into Ecodevelopment Committees (EDCs) in the IEP implementation has resulted positive impacts in terms of reducing offences and initiating regular involvement of local people in protection activities. Sustainability of the project was incorporated in financial mechanisms of EDCs, and local stakeholders were fully involved in the committees. Results of interviews with randomly selected respondents show a change of their livelihoods from forest-dependent to independent. Most of them were aware of the boundary and functions of PTR. They responded well to benefits from PTR, and 26 of totally 29 respondents wished to continue the activities even after the project period.