The article considers the relation of shifting cultivation to deforestation and degradation, and hence its impacts in terms of carbon emissions and sequestration potential. There is a need to understand these relationships better in the context of international policy on Reduced Emissions from Deforestation and Forest Degradation (REDD+). The article reviews the way in which shifting cultivation has been incorporated in global and national estimations of carbon emissions, and assembles the available information on shifting cultivation in Tropical Dry Forests (TDF) in Mexico, where it is widely practiced. It then takes the case of two villages, Tonaya and El Temazcal, which lie within the basin of the River Ayuquila in Jalisco, Mexico. Field data for the typical carbon stocks and fluxes associated with shifting cultivation are compared with stocks and fluxes associated with more intensive agricultural production in the same dry tropical forest area to highlight the carbon sequestration dynamics associated with the shortening and potential lengthening of the fallow cycles. The biomass density in the shifting cultivation system observed can reach levels similar to that of old growth forests, with old fallows (>20 years) having higher carbon stocks than old growth forests. Per Mg of maize produced, the biomass-related emissions from shifting cultivation in the traditional 12 year cycle are about three times those from permanent cultivation. We did not, however, take into account the additional emissions from inputs that result from the use of fertilizers and pesticides in the case of permanent agriculture. Shortening of the fallow cycle, which is occurring in the study area as a result of government subsidies, results in higher remaining stocks of carbon and lower emissions at the landscape level.