Land use and farmers’ livelihoods in mountainous regions of northern Laos are rapidly moving away from subsistence to market based agricultural systems, changing farmers’ relationship with land and natural resources. The current study examines patterns of land use change in northern Laos, especially focusing on the expansion of agricultural land in upland areas. It also examines factors that influence local farmers’ livelihood and their decisions on land use. A series of government policies that were implemented since the 1980s restricted upland farmers’ access to upland fields and fallow forests, and led to the relocation of upland communities. The opening of regional borders for trade in the early 1990s, which brought new economic opportunities for local farmers, further accelerated the demand for agricultural land and led to a concentration of population in settlements along the road. A combination of both external and internal factors are influencing households in rural areas to actively seek new economic opportunities and adapt their livelihood basis, as well as altering their relationship with land and resources. This rapid transformation also questions the effectiveness of the government’s resource management policy that developed during the 1990s aiming to control expansion of upland shifting cultivation practices through delineation of resource boundaries.