The Sierra Norte of Oaxaca, Mexico has multiple examples of large-scale community conservation and passive forest recovery due to agricultural abandonment combined with successful forest-based community enterprises, based on both timber and non-timber forest products (NTFPs). The community of Pueblos Mancomunados (Joint Towns) in the Sierra Norte has extremely complex governance challenges and four forest-based community enterprises and additional income generating activities from wild mushroom harvesting. The community has survived internal turbulence that has pitted advocates of strict conservation versus well-managed logging, mirroring debates between John Muir and Gifford Pinchot a century earlier in the United States. Currently, the community combines the economic foundation of a subsistence economy with a sophisticated array of forest-based enterprises, now almost entirely oriented towards conservation and non-timber forest products (NTFPs). They have evolved innovative governance institutions of their own design to manage both market and community turbulence, including rules that prohibit agriculture in recovering forest areas. It is a striking example of what can happen when communities have clear rights over their forest resources, with appropriate support from government policy.