To restore China’s degraded ecological environment, the government has launched an environmental restoration project named the “Grain for Green Project” (GGP) in 1999. From 1999 to 2010, the government will spend 40 billion dollars to convert 147 million ha of croplands and 173 million ha of wastelands into forestlands and grasslands in 25 provinces, municipalities and autonomous regions. A primary goal is to replace cropping and livestock grazing in fragile areas with trees and grass. Given the tremendous scale and great number of participants in the project, the attitudes of the affected farmers and the future development in the area where GGP is implemented have a direct influence on the success of the project. To gain a clear idea about the farmers’ attitudes towards the project and put forward the development models for the forestlands converted from croplands, two case sites in the mountain-gorge region in Nujiang River are selected as the study areas, and the methods of field survey and semi-structured interview are adopted to make interviews with more than 100 households in 2002 and 2003 in order to quantify the farmers’ opinions about the GGP and how it has affected their livelihood, socio-cultural and industrial structures, etc. The results are as follows: 1) the project has a certain influence on the farmers with better economic basis and exerts greater influence on the farmers living in the low-elevation regions than on those living in the regions with middle-high elevation; 2) the production models of the local farmers has changed from cultivation and animal husbandry to forestry and sidelines due to the project and the income structure has changed from animal husbandry as main income source to state subsidy and sideline as main income sources; 3) the reduction in the grain income and decrease in the quantity of livestock because of the project have led to the diminution in the total income of the farmers; 4) the project has resulted in changes in the lifestyles and architecture styles of the local farmers, and the traditional “huotang” culture has gone away after the implementation of the project; 5) energy utilization has changed from firewood to methane and electricity in the wake of the implementation of the project. The above-mentioned study results have indicated that the GGP has truly exerted influence on the livelihood and production of the local farmers. Therefore, it is very necessary to make a research into the development models in the forestlands converted from croplands to resolve the problems of the farmers’ livelihood and production. The study results will provide some references for the sustainable development of the mountain-gorge regions.