In the Brazilian Amazon, deforestation and its associated greenhouse gas (GHG) emissions will only be effectively lowered if a new rural development model is adopted, allowing forest conservation to contribute to local economic growth. This article presents an initiative called “REDD for Amazon Smallholders” which is under development to address this challenge. The initiative involves 350 smallholdings located in an area characterized by the expansion of the agricultural frontier in the Brazilian Amazon (Transamazon Highway region-BR230-in the southwestern region of the State of Pará). Projects that help contain deforestation and reduce frontier expansion can play an important role in climate change mitigation (Carvalho et al. 2004, p. 172), especially if at the same time they create opportunities for compensating those who are able to maintain forest carbon stocks. While land-use change accounts for 15-18% of annual carbon emissions (9.9 billion tons of carbon) globally (Le Quéré et al. 2009, p. 832), in Brazil it accounts for the majority of the country’s emissions (Figure 16.1) and is the primary reason why Brazil has been the fourth largest carbon dioxide (CO2)emitter in the world (MCT, 2010). Since 1960, approximately 17% of the Amazon rainforest (68 million hectares, an area equivalent to the size of France or almost twice the State of Maranhão), has been converted to other land-use activities (INPE 2009). Brazil’s emissions of CO2e from land-use change, forestry and agriculture accounted for almost 80% of its total emissions in 2005 (MCT 2010, vol. 1, p. 151).