Co-managing the commons within the new governance structures of South Africa has the potential to promote participatory democracy and improve natural resource management. Inequitable access to and use of natural resources characterised apartheid-era policies and practices. In line with post-1990 democratisation processes, public involvement, participation, community-based initiatives and co-management have been promoted as key aspects of natural resource management policies. Power sharing, empowerment, organisational capacity building and improved natural resource management are some of the key principles of co-management within the South African context. This paper will explore the applicability of the co-management concept to the enhancement of rural livelihoods in South Africa with specific reference to the conservation sector, and coastal and marine resources policy and implementation processes. Comanagement initiatives in the fisheries and conservation sectors in South Africa have failed to incorporate many co-management principles, such as joint decision-making and benefit distribution. Instead, co-management has been transformed from a community-based management approach to a more top-down, corporatist approach. The visibility of market liberalisation and privatisation trends in South African natural resource policies reflects the dominance of such thinking in broader macro-economic policies. Thus, the embeddedness of local initiatives within the broader South African political economy explains why co-management, in its present form, provides little respite for the rural poor. In reality, the ‘action space’ created by natural resource management policies for community-based natural resource management, is not being claimed by rural communities. A re-definition of co-management, which addresses the realities of the fractured rural communities of South Africa within a liberalised political economy, is required to develop natural resource management systems that address the injustices of the past. Furthermore, co-management concepts should be re-worked to assist in the ‘demarginalisation’ of rural communities in South Africa.