Fiscal policies are used by the Nigerian government to address economic development. However, these policies experienced sudden changes and created havoc to forestry development. The study evaluated how failed policies exerted negative impacts on sustainable forest management in Nigeria. Data were derived through a questionnaire survey and discussions held with major stakeholders. Results of data analyses revealed that various policy failures collectively contributed in: (i) high rate of dereservation of forests for alternative uses, (ii) massive encroachment into the forest reserves for food production, (iii) fragmentation of forest reserves which has hampered in situ conservation, and (iv) increased illegal activities in constituted forest reserves: logging, hunting and farming. Policy reforms should be anchored on full participation of all stakeholders in forest management and harmonization of various policies in the country.