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China is undergoing economic growth and expansion to a free market economy at a scale and pace that are unprecedented in human history. This is placing great pressure on the country's environment and cultural diversity. This paper examines a number of case histories in China, focusing on the culturally varied and ecologically diverse southwest region of the country. We show how developments in recent Chinese history have devalued and in some cases eliminated indigenous knowledge and practices in the quest to strengthen the centralized state. Despite these changes, more than 30 ethnic minorities live in southwest China. For generations these peoples have maintained landscapes through traditional land use and cultural practices. This indigenous knowledge places a high value on protecting forests, landscapes, and water catchments while preserving biodiversity. These values are maintained through religious beliefs, hunting taboos, and the protection of sacred sites. We advocate a conservation policy for China that includes the indigenous knowledge and values needed to maintain the environment and the traditional cultures themselves. There are seminal signs that the government is beginning to support indigenous cultures in China. The Organic Law of 1998 granted villages the legal right to self-government and gave indigenous communities greater responsibility for land and resource use. Traditional and indigenous cultural products have also developed a market and an economic value within a growing tourism industry. In many cases, however, indigenous people remain isolated from major land-use and conservation decisions that are the result of centrally planned policy. Meanwhile, frequent oscillations in forest policy and land tenure insecurity since the 1950s have led to the erosion of many local institutions and the loss of indigenous knowledge. We suggest that the long-term viability of the environment requires an interactive approach that involves local people as well as governments in the creation of environmental policy. We also suggest that enlightened self-interest can help economic development coexist with the needs of traditional cultures.