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This article examines various environmental alternatives within the context of forest resource-dependent communities of the State of Oaxaca, Mexico. Two main objectives were to describe particular rural development routes among different Mexican communities, and to explain why certain environmental options for rural development are selected over others. While many communities choose either sustainable or illegal logging options in Oaxaca, some may decide against logging of any kind. Four principal forest-based community categories, according to a government forest classification scheme, are discussed in the context of environmental alternatives for this article. Based on this typology, two integrated forest management communities in the Sierra Norte of Oaxaca are described and compared. One communitys decision not to log within a shared land arrangement has caused significant tensions in the region. Key findings illustrate the extent to which rural communities can make appropriate environmental decisions and examines their effects on environmental and social sustainability. Increased rural involvement in environmental decision-making is called for, since rural residents are those most likely to appreciate nearby natural resources as a source of sustainable livelihoods. It is expected that this research may be applicable to rural areas of other countries.