This article proposes psychological empowerment as an orientation and targeted outcome for community development efforts. Psychological empowerment has been the focus of many studies in community psychology, where it has been defined as the psychological aspects of processes through which people, organizations, and communities take greater control over their affairs. Psychological empowerment has been found to increase with greater levels of community participation, and to have protective mental health effects. Community and organizational processes that are psychologically empowering are promising as approaches to sustainably promote both subjective well-being and objective changes in local systems. The case is made in this article for more widespread use of empowerment theory, at multiple levels of analysis, in community development processes. Participatory development is viewed as a particularly promising approach for the promotion of psychological empowerment, yet more thorough consideration and assessment of psychological empowerment holds promise for achieving the full potential of participatory approaches.