This article shows how community libraries can create and support literate environments, which are essential for building and sustaining literacy skills in local communities. The paper begins with a subject analysis reviewing available background materials and literature on the topic. Next, relevant issues are considered based on experiences and impact evaluations from specific community libraries, namely Nepal's Rural Education and Development (READ) Centres. The findings indicate that since their foundation in 1991, READ Centres have evolved from traditional libraries to effective community development centres with a strong focus on social empowerment, economic development and lifelong learning, based on a library concept which is needs-based, community-owned and sustainable.