More than three-quarters of Mexico’s coffee is grown on small plots shaded by the existing forest. Because they preserve forest cover, shade coffee farms provide vital ecological services including harboring biodiversity and preventing soil erosion. Unfortunately, tree cover in Mexico’s shade coffee areas is increasingly being cleared to make way for subsistence agriculture, a direct result of the unprecedented decline of international coffee prices over the past decade. This paper summarizes the key findings of a three-year study of deforestation in Oaxaca, one of Mexico’s prime regions for growing shade coffee. First, we find that deforestation during the 1990s was significant. Second, the loss of tree cover can likely be slowed by promoting coffee-marketing cooperatives and “green” certification, providing coffee price supports, and specifically targeting areas populated by small, indigenous farmers for assistance. Finally, to be effective, such policies must be implemented quickly after price shocks occur.