Increasing attention has been given to “indigenous” knowledge in Third World rural societies as a potential basis for sustainable agricultural development. It has been found that many people have functional knowledge systems pertaining to their resources and environment, which are based on experience and experimentation, and which are sometimes based on unique epistemologies. Efforts have been made to include such knowledge in participatory research and projects. This paper discusses socio-political, institutional, and ethical issues that need to be considered in order (...) to understand the actual limitations and contributions of such knowledge systems. It reviews the nature of local knowledge and suggests the need to recognize its unique values yet avoid romanticized views of its potential. Local knowledge and alternative bottom-up projects continue to be marginalized because of the dominance of conventional top-down R&approaches, pressures of agrochemical firms, scientific professionalism, and for other political-economic reasons. It is argued that the exploitation of local knowledge by formal institutions should be avoided; instead, people need to establish legitimacy of their knowledge for themselves, as a form of empowerment. (shrink)