Community-based participatory development empowers villagers to develop community cohesion and confidence, increase their ability to identify, analyze, and priorize their own needs, and organize the resources to meet these needs. An important first step in the process involves establishing a cohesive and functional community group. The authors believe that this is best accomplished through villagers' critical examination of their experiences with development including their understanding of reasons for success or failure, and the gradual emergence of a model of working together that acknowledges and builds on participation and collective expertise. This approach to development is demonstrating encouraging results in a rural area of western Nepal in a university affiliated Canadian/Nepali Health Development Project. This paper describes two mini-projects to illustrate the evolution of group formation through reflection, analysis, and action, and identifies outcomes that could serve as indicators of community empowerment. The paper also presents a generic model of empowerment, and offers lessons learned by the project through the application of the empowerment process to sustainable health development.