We study the predator - prey dynamics when a reserve is created to protect a certain number of prey population from predation. This investigation is essential to derive some guiding principles to conserve the prey population and also to understand the behavior and dependence of predator population on the reserve capacity. The present study concerns analysis of a fairly general model and hence some of the existing results based on specific explicit models, like Lotka-Volterra model and Rosenzweig-MacArthur model, can be derived from this work. In this study, conditions have been derived for coexistence of predator and prey, and extinction of predators. Results are obtained for global stability of required equilibrium of the model. Also, a method is suggested to compute reserve capacity in order to drive the ecosystem state to a required level. The results developed in this work can be interpreted in different contexts like resource conservation, pest management, bio-economics of a renewable resource etc.