A strategy for small farm development in the Third World is suggested, emphasizing preservation of traditional farming systems while maintaining biological and genetic diversity. Basing agricultural development on indigenous knowledge, technology, and social organization can provide important guidelines for the design of cropping systems that allow low-income farmers to produce subsistence and cash crops with minimal dependence on external inputs. Suggested alternative agricultural strategies are based on diverse farming systems that achieve moderate to high levels of productivity by manipulating and exploiting resources that are internal to the farm. The resulting systems are more sustainable and economical, thus increasing the equity of the system. Several rural development programs in Third World countries, especially in Latin America, that incorporate these agroecological principles are discussed. In contrast to approaches that have been transferred from the United States without necessarily being suited to the circumstances of small farmers, and which require the purchase of expensive external inputs, these programs include sustainability, stability, and equity as goals, along with increased production. Rural development strategies based on peasant systems that are biologically and economically stable are proving to be a viable survival alternative for a great portion of the impoverished rural population in the Third World.