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Many smallholders in the Amazon employ swidden (slash-and-burn) farming systems in which forest or forest fallows are the primary source of natural soil enrichment. With decreasing opportunities to claim natural forests for agriculture and shrinking landholdings, rotational agriculture on smaller holdings allows insufficient time for fallow to regenerate naturally into secondary forest. This case study examines how Peruvian farmers use “improved fallows” as an adaptive response to a situation of decreasing soil fertility and how the farmers describe the rationale underlying the various actions taken in these modified fallow systems. The results indicate that farmers establish improved fallows using contextual ecological knowledge and various techniques to introduce a large diversity of tree species. This practice is also used to restore degraded land to agricultural production. The tasks of maintaining productivity on agricultural land and reforesting degraded areas is becoming increasingly urgent in the Amazon, making agricultural practices that involve reforestation and tree management highly relevant. Since swidden farming systems are the basis for the livelihoods of most Amazon smallholders, good farming practices elaborated by swidden farmers are important for sustainable small-scale family farming systems in the Amazon.