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This study outlines the changes in agricultural policies and market conditions in Vietnam for the last 20 years characterized with gradual decentralization and integration in the global economy. Using a case study approach, the study examines how these institutional changes influence land use and land management and the impacts on the environment and the livelihood systems among members of a local community in the uplands of Vietnam. Preliminary analysis at the local level shows that changes policies and market conditions result in a rapid transformation of the socio-economic and biophysical landscape in this upland community. Large forest area had been converted into commercial agricultural land. Results of the study also show that farmers base their decisions on short-term market expectations rather than on long-term market information. This lends them more vulnerable to greater economic losses in the long term as shown by the behavior of mulberry and coffee production in the study area. Farmers had not only opened new forest land for coffee cultivation but also shifted from mulberry to coffee after 1994 when the price of coffee beans increased. However, there are risks associated with coffee, as a monocrop in a large area such as fluctuation in market prices and environmental degradation. The study provides empirical evidence to the complex interplay of policies and market conditions on land use, land management and livelihood system of the Vietnamese upland farmers. The study raises issues relating to the promotion of sustainable agricultural practices and the need for agricultural land use planning that aims to deal with the fluctuating global market without compromising the welfare of small farmers and landholders.