Crop boom-and-bust cycles driven by agricultural commercialization trigger dramatic agrarian change in mountain areas. There is extensive literature considering the impact of short-term crop cycles on local communities, revealing the vulnerability of farmers' livelihoods to market fluctuations and policy changes. However, little attention has been paid to the role of local agency in coping with and mitigating the impacts of these boom-and-bust cycles from a longitudinal perspective. Through an in-depth case study in Southwest China, we examined the dynamics of local agency in response to oscillating booms and busts of walnut crops over the past 30 years. The research reveals the ways in which local agency—namely, local knowledge, culture, and institutions—has interacted with policy changes and market fluctuations to sustain local livelihoods and foster ecosystem conservation. Our findings suggest that, while crop booms may create market uncertainty for local communities, they also provide opportunities for structural changes in agricultural practices, thereby introducing a potential pathway for local sustainable development amid agrarian change and proactive local agency. The policy implications drawn from this research call for strengthening of local agency for the sustainable development of mountain areas in countries with strong government intervention. This can be achieved by promoting local capacity building and expanding recognition of local knowledge, culture, and institutions.