There has been extensive debate on the conservation impact of people located within protected areas. In a tiger reserve in central India, we find that the densely populated villages located outside the park boundary are better connected to regional markets by road networks, and are associated with greater deforestation rates and more forest fragmentation compared to the more isolated villages in the park interior. The park itself however appears well protected in terms of forest cover and connectivity. Instead of focusing on resettlement of forest villages, forest protection needs may be better served by working with these surrounding communities to develop alternate mechanisms for income generation.