Abstract: Uncertainty of return, investment irreversibility, natural appreciation and management flexibility are typical characteristics of forestry investment projects; therefore, a reasonable and applicable decision-making method is necessary in a forestry investment project. The net present value (NPV) is widely applied in traditional evaluation of investment projects, but this method ignores options, which easily leads to inaccurate decision and wrong judgement. In this paper, we analyze the real options in forestry investment projects, including expanding options, narrowing options, abandoning options and deferring options. Then we build a real option value evaluation model based on binomial tree options pricing model, and verify the model in a real project, in which there exist different options in different stages. It is proven that the real option evaluation model is much more feasible and more accurate in forestry investment projects.