This paper examines the development and effects of a rapid livelihood transition on households, and reflects on how it fits within historic trends of livelihood change for people living in highly variable and vulnerable environments. It also discusses the implications of livelihood dynamism for local governance of natural resources. In recent decades, seaweed cultivation has expanded exponentially in coastal communities across the Asia-Pacific. A case study is presented of a remote small-island community in eastern Indonesia where over the last ten years a dramatic shift in livelihood focus has occurred. Previous dependence on diverse low-productivity livelihood activities transitioned to a predominant focus on seaweed farming. The case shows how social, economic and cultural environments co-develop as people move out of conditions of collective poverty and into more nuclear household-oriented livelihood activities. Specific attention is given to the influence on a marine resource co-management program operating on the island to illustrate how local livelihood dynamics relate to broader paradigm-driven conservation and rural development initiatives. While alternative livelihood programs seek to relieve pressure on resource stocks and provide opportunities for coastal people, this case study provides timely insights into the kinds of unintended effects, trends and impacts that are associated with rapid change in the way people make a living. This study argues that, in addition to achieving higher standards of income and well-being, livelihood improvement interventions need to adequately ensure that conditions under which new livelihood arrangements come to function can be maintained locally.