Construction of roads into remote rural areas can improve livelihoods by reducing transportation costs, but may also have negative environmental impacts, such as increased deforestation. However, evidence of the effect of rural roads on household environmental income and reliance, as well as local level forest stand conservation is limited. This study, conducted in Mustang District in Nepal, contributes to answering the following questions: (i) what are the impacts of the establishment of rural roads on household environmental income and reliance; (ii) what are the determinants of environmental income and reliance, and how are they affected by road establishment; and (iii) what are the short-term impacts of the construction of a rural road on local forest conservation? Following the Poverty Environment Network (PEN) methodology, income data from 176 randomly-sampled households were collected in 2006 from two similar Himalayan villages, Lete and Lulang, and again in 2012 after a new road was constructed in 2008 in Lete. Forest strata data were collected in Lete through permanent sample plots (n = 59) measured in 2005 and 2010 and used to estimate stock change (before and after road construction), annual increment and annual wood extraction. Results show that the new road had significant positive effects on absolute household environmental income, but negative effects on reliance as other income options became available. Wood product extraction levels remained below increment levels, indicating that the road did not (yet) have negative implications for local forest conservation.