The vast plain known as the Gran Chaco is a natural region of about one million km2 extending over parts of Argentina, Bolivia, and Paraguay. It is the second largest natural biome in South America after the Amazon region. The primitive landscape of the region was mostly parkland with patches of hardwoods intermingled with grasslands. Increasing human encroachment, largely by poor ‘puesteros’, with associated overgrazing, excessive timber harvesting, charcoal production, and Overexploitation of wildlife, is transforming the region into a dense and unproductive shrubland and is contributing to increasing rural poverty. A management system for the sustainable use of the Chaco has been developed based on a multiple-species ranching system that includes beef timber, charcoal, and wildlife production. An evaluation of the management system finds that it is capable of protecting and, in fact, restoring the resource base and providing higher economic returns in a sustainable manner. But high initial costs as well as a divergence between the ‘best’ interests of puesteros and society jeopardize the feasibility of the managed system.