In developing countries like India where rural and remote populations suffer socio-economic inequities, protected areas have further narrowed down their livelihood options. The objective of the present study is to understand the household economic condition and nutritional status among the Shabar tribe living in a protected forest area of Orissa. A total of 154 families from three selected Shabar (tribe) villages inside Chandaka-Dompara sanctuary area were investigated to collect household information and included, adult height, weight and household dietary survey. Information regarding forest conservation strategies was collected from the respective forest department and secondary sources. Per capita food consumption and body mass index were computed to understand nutritional status. Regression analysis was used to understand the associations. Chandaka-Dompara forest area was designated as sanctuary during 1984, which was drastically influenced in economic activity and dietary habit among the Shabar tribe. The manifestation of forest conservation strategies was prohibited to use of natural resources and made more dependent into cash economy. These were forced to engage in wood cutting and selling. The agricultural land was only cultivated once in a year during the monsoon season to produce food for their own consumption. As a result, 52.02 percent of families from lower economic sub-groups were not able to get optimal calories. Consumption of calorie among females was significantly lower in the lower economic group compared to their higher economic counterpart. This reflection was observed in nutritional status (BMI <18.5 kg/m2) among adult Shabar, where significantly (p<0.01) higher percentage of undernutrition were observed among females than males. Females in the lower economic group were more likely to be undernourished [OR = 1.93] than those in the higher economic group. Poor household economy and undernutrition was observed among the Shabar tribe living in protected forest habitats of Orissa.