Designated a sanctuary in 1955, Nagarahole was enlarged to its present size in 1974 by combining the adjoining Mysore forests with the Nagarahole sanctuary. Two towns, Nagarahole and Murkal, lie smack inside the reserve and as many as 6,000 people live inside the park where they survive by cultivating small holdings and by collecting minor forest produce.

Initially, while a part of the commission of Coorg, the sanctuary was oriented to the sale of certain forest produce. Many villagers still graze their livestock here and came into conflict with the forest authorities. A major fire destroyed huge tracts of forest in 1992. The fires are believed to have been set by disgruntled locals, targetting park officials who had arrested poachers. They received support from local farmers and graziers who have always sought access to the nutritious grasses inside the forest, ever since the stocks on the outside vanished. Fortunately, with protection, the forest has now regenerated.

Felling of old growth trees for a saw mill located inside the park is a major problem. Even today, when everyone is well aware of the ecological needs of the forest, some 'experts' continue to push for policies that seek to profit from protected areas like Nagarahole. Teak and eucalyptus monoculture plantations are destroying the rich biodiversity of the region.

A weed called Eupatorium glandulosum that can grow to heights of 15 m poses major problems as local species are squeezed out and leaves less fodder for herbivores. Such exotics also stifle the natural regeneration of local tree species.

Tribals settlements, cultivations, and livestock cause considerable disturbance to the wild animals. Their presence also adds to fire hazards. In principle, minor forest produce is supposed to be extracted in a small scale. In fact, huge amounts of biomass are taken out of the forest for commercial use and sold in markets as far away as Hansur, a major timber depot.

Major battles between wildlife activists and tribal rights activists have caused tensions in the recent past. One group wants more facilities for human settlements inside the park, while the other points to the fact that this would have a serious impact on the future of the tiger and elephant as it would only add to poaching and fire hazards. Generous rehabilitation packages have been offered and accepted by small groups of people, while others are waiting to see the outcome of such initiatives. But this shift is being opposed by tribal activists who fear that it may result in an exodus of humans from the forest (which is precisely what wildlife experts say is vital to the survival of the tiger).

Field research conducted by Dr Ullas Karanth of the Wildlife Conservation Society, USA, suggests that protecting prey and their habitats are both essential to the long-term survival of the tiger because these two ecological factors can together determine the breeding success of the tiger.