Previously lineal and centralized natural resource management and development paradigms have shifted toward the recognition of complexity and dynamism of social-ecological systems, and toward more adaptive, decentralized, and collaborative models. However, certain messy and surprising dynamics remain under-recognized, including the inherent interplay between conflict, social capital, and governance. In this study we consider the dynamic intersections of these three often (seemingly) disparate phenomena. In particular, we consider the changes in social capital and conflict that accompanied a transition by local groups toward adaptive collaborative governance. The findings are drawn from multiyear research into community forestry in Nepal using comparative case studies. The study illustrates the complex, surprising, and dialectical relations among these three phenomena. Findings include: a demonstration of the pervasive nature of conflict and "dark side" of social capital; that collaborative efforts changed social capital, rather than simply enhancing it; and that conflict at varying scales ultimately had some constructive influences.