Despite the potential of urban woodlands for recreational use and participatory management, citizens’ perception of urban woodland quality, as well as the impact of citizens’ co-management on urban woodland quality, have not been thoroughly studied to date. The present study investigated how residents in Holstebro, Denmark define urban woodland quality in their neighborhood named Sletten and how they perceive the quality impact of their participation in the management and maintenance of a transition from private gardens to public urban woodland—the so-called co-management zone. Field survey of participation for all housing units with a co-management zone (n = 201) informed strategic selection of residents for individual interviews (n = 16). It was found that social, experiential, functional, and ecological dimensions are all part of residents’ perception of urban woodland quality, whereby maintenance, accessibility, and nature are dominating aspects of these dimensions. While these aspects are already integrated in quality assessment schemes for other types of urban green space, our study revealed the importance of structural and species diversity between and within woodland stands as central for the perceived woodland quality—a quality aspect that distinguishes woodland from other types of urban green space. Participation in the management and maintenance positively influenced the perceived woodland quality. Residents found that their participation in the co-management zone created functional and ecological, physical qualities in the woodland. Moreover, the active participation provided the residents with a range of social and experiential benefits, many of which they themselves argue that they would have missed out on if they were only allowed to use the woodland “passively”. These findings suggest a large—but also largely untapped—potential of participatory urban woodland management to contribute physical qualities to urban woodlands and benefits to its users.