This study analyzed the process of community-based development in order to discover its key elements and to propose a theoretical framework to guide experience. The Evangeline Region of Prince Edward Island, which in recent years had developed innovative institutions to link co-operative organizations at the community level and to support community-based development, was the study site.Since general theories do not provide compelling explanations of how the phenomenon of community-based development takes place in a particular situation, this study adopted an inductive methodology. Using a tentative theoretical framework derived from the history of the region and from community-based development literature, the study investigated the actual formation process of four Evangeline co-operatives through interviews with initiators and through a review of relevant documents.The data show that the factors such as community attachments, a movement perspective and locally-controlled development organizations supported community-based development. Factors such as the direction of Evangeline projects by organizations external to the community, an inadequate level of human and financial resources available to community development organizations, and the lack of specialized knowledge and skills in the region operated to limit the effectiveness of the development process. The study proposed a theoretical framework to guide practitioners. This framework argues that effective community-based development must include three essential elements: the expansion of community consciousness, strategies of empowerment, and the establishment of supportive structures. The elements of the framework are interpreted in relation to development and resource mobilization theory.Implications of the study suggest the importance of community loyalty and commitment for sustained community-based development. Planned strategies to elicit participation are needed. Community-development organizations which have the capacity to initiate community-consciousness and to provide technical and financial support can function to generate community loyalty and to ensure project viability. Instead of directing development, governments should play a facilitating role. Comprehensive strategies of support by the co-operative movement would be beneficial for community-based development.