In India, the Forest Rights Act (2006) legally recognizes the land rights of forest-dependent and forest-dwelling communities by granting them decision-making power over the lands they have traditionally depended on. Through the Community Forest Resource (CFR) rights, a key provision under this Act, communities are entitled to protect biodiversity, manage forest produce, and participate in forest planning and decision-making in their customary lands. While CFR rights have been studied for their socio-economic and material outcomes, their socio-psychological implications remain relatively underexplored. We addressed this critical gap by using a combination of household interviews, focus group discussions, and narrative walks in three CFR-entitled villages in Vidarbha Maharashtra, India. Responses were transcribed and analyzed using value coding and descriptive statistics. An inductive approach guided the identification of key themes, followed by multiple rounds of interpretation situated within the context of CFR governance. The five key themes that emerged were satisfaction with CFR-based forest management, inclusion in decision-making, freedom to express opinions, values of environmental stewardship, and aspirations for empowered village futures. We found that CFR rights had positive socio-psychological implications for most respondents by fostering a greater sense of agency, belonging, inclusion, and empowerment in relation to forest governance. However, some respondents reported concerns about power asymmetries and limited representation. These findings suggest that policies need to move beyond procedural recognition of CFR rights to actively enable inclusive governance practices. Strengthening representation, supporting community-led stewardship, and addressing local power dynamics are essential for advancing both equity and effectiveness in CFR implementation.