In the Anaikatty region of the southern Western Ghats in India, land-use in forest peripheries is characterized by low productivity and extended fallows. Land alienation, soil degradation, drought, wild animal attacks, and declining access to forests have debilitated the livelihood base of a tribal community known as Irulas. This study seeks to identify alternate land-use and management strategies to strengthen and diversify the livelihood options that are confronted by these extremely poor marginal farmers. Benefit-cost analysis in combination with stakeholder discussions reveal that alternative land-use strategies such as millet-based dry-farming along with the adoption of soil conservation or growth of perennials on field bunds are economically efficient relative to current dry-farming and that these enjoy acceptance among farmers. Adoption of such systems would result in a nearly 300 percent increase in the annual income from their land. Other economically superior alternative land-uses are not acceptable to farmers, indicating the care with which tribal development policies need to be made. The tribals in this region are caught up in an almost insurmountable poverty and environment trap. This study offers suggestions that may enable them to move away from the grim reality that currently faces them.