In the complex agro-ecological conditions of Vietnam’s northern borderlands, attempts by ethnic minority farmers to create sustainable livelihoods, along with the impacts of state development policies, have direct consequences for land use and land cover (LULC) change. In this paper we analyse the degree to which LULC has changed and diversified from 1999 to 2009 in Lào Cai Province and the underlying relationships with ethnic minority livelihood diversification strategies. We examine the correlation between LULC diversity and various socioeconomic and biophysical proxies using a spatial autoregressive model. Our findings indicate two major changes in LULC: an increase in closed canopy forest and substantial urban growth. LULC diversity increased between 1999 and 2009, suggesting a transition between land uses and/or a diversification of livelihood strategies. Socioeconomic proxies are significant predictors of LULC diversity in both years, while biophysical proxies are only effective predictors in 2009. In-depth interviews regarding state-led policies and ethnic minority livelihoods reveal some of the underlying mechanisms of such LULC transitions and associations.