Participatory Forest Management approach is widely promoted for managing natural forests in Ethiopia. This study examined the arrangement and performance of Participatory Forest Management Cooperatives (PFMCs) in the dryforest context using quantitative and qualitative data from 19 PFMCs and analyzed using time series data analysis, multiple linear regression and SWOT analysis. The analysis revealed that PFM in the lowlands of Northwest Ethiopia is used for devolution of forest governance so that local communities gain access to management and use rights over the dryforests through their PFMCs. The studied PFMCs engage in the production and marketing of commercial NTFPs dominantly Frankincense while managing an average of 3918 ha of dryforests and having an average of 141 members in each PFMC. PFMCs operation promoted collective actions and resulted in an overall enhancement of frankincense production, prices and gross revenues over the years. The production, price, gross revenue of PFMCs and government revenue shows a mixed trends. The production of frankincense of PFMCs declined till 2020 but increased by 900% from 2020 to 2023. The price of frankincense also increased by 214% between 2018 and 2023 from 1500 to 3220 USD/ton. In 2023, the PFMC annual revenue and government revenue through royalty fee reached 991,760 and 198,352 USD. Performance of PFMCs shows variation among the studied PFMCs as demonstrated by the variation in their annual revenues. The regression analysis indicates that forest resource availability as measured by per capita forest area (p = 001), institutional support (p = 0.028), member size of the PFMCs (P = 0.02) and experience of the PFM leadership (p = 0.022) significantly and positively affect the PFMCs performance. Generally, the economic performance of the PFMCs varies and their success depends on the PFMCs. The study recommended institutional supports to strengthen PFMs, scaling up f PFM approaches and promotion of diversified NTFP commercialization in the drylands to enhance the PFMCs performance of sustainable dryforest management while enhancing local livelihoods.