Current developments in Central Europe will have far-reaching consequences on the region’s forestry and related institutional arrangements, such as forest administration, extension services and forest research. Future prospects for the rural population living on income from forestry will considerably depend on how individuals and organisations react in view of these changes. It will be vitally important how forest owners and managers apply new knowledge in forestry and how organisations best deal with the emerging changes. Innovation and entrepreneurship are main driving forces for economic growth, competitiveness and employment creation, especially in rural areas. From 2001 to 2003, the EFI Regional Project Centre INNOFORCE conducted research on innovation and entrepreneurship in forestry in Central Europe, seeking answers to the following questions: What is the situation and perceived future outlook for forestry in the region? How important are innovation and entrepreneurship considered in the sector? How much innovation and entrepreneurship is actually taking place? What are supporting and impeding factors? The research report provides new knowledge on innovation behaviour of forest holdings and forest related innovation systems in Central Europe and on changes that are necessary to enhance innovation and entrepreneurship in the sector. Survey results are accompanied by lessons learned from more than 30 cases referring to innovations in forestry implemented in eight countries.