Research Highlights: The reasons for persistence of forest fragments in human-dominated landscapes have rarely been examined, despite their importance in biodiversity and ecosystem services. We determined these reasons for forest fragments on collective land in Xishuangbanna prefecture, southwest China. Background and Objectives: Reconciling economic development with biodiversity conservation has been a major challenge in China’s small tropical land area, where local realities have often been in conflict with national policies. In Xishuangbanna, much of China’s most biodiverse forest area has been replaced by cash crops in recent decades, but numerous small forest fragments remain on collective land. Our objective was to find out why these fragments have not been cleared. Methods: We used a combination of semi-structured interviews with 600 households in 69 villages representing nine ethnic groups and information from key informants. Results: Overall, 64% of individual households retained forest fragments on the land allocated to them, and 93% of villages retained larger areas managed as a collective forest. Most (71%) interviewees said that fragments on their own land were on sites of low agricultural value and were retained as fuelwood sources. They were also often (33%) underplanted with crops and supplied with other forest products. All interviewees attributed the retention of collective forests to policy restrictions on clearance, with most (96%) mentioning cultural and religious uses and many recognizing environmental benefits. Most were also used as sources of wild edible plants (61%) and other forest products. Many said these collective forests had shrunk over time, particularly in areas suitable for profitable cultivation. Conclusions: China’s new ecological redline policy will protect most larger patches of forest in Xishuangbanna, but the smaller fragments on land allocated to individual households are also of conservation value, particularly in areas with no other forest. Some form of compensation scheme is needed to encourage their continued retention.