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Alternative livelihood project is a widely used term for interventions that aim to reduce the prevalence of activities deemed to be environmentally damaging by substituting them with lower impact livelihood activities that provide at least equivalent benefits. Alternative livelihood projects are widely implemented in conservation, but in 2012, an IUCN resolution called for a critical review of such projects based on concern that their effectiveness was unproven. Here, we focus on the conceptual design of alternative livelihood projects by considering their underlying assumptions. We place alternative livelihood projects within a broad category of livelihood-focused interventions to better understand their role in conservation and their intended impacts. We present and dissect three flawed assumptions based on the notions of substitution, the homogenous community and impact scalability. Interventions based on flawed assumptions about people’s needs, aspirations and the factors that influence livelihood choice are unlikely to achieve conservation objectives. We therefore recommend use of a sustainable livelihoods approach to: understand the role and function of environmentally damaging behaviors within livelihood strategies; differentiate between households in a community which have the greatest environmental impact and those most vulnerable to resource access restrictions to improve intervention targeting; and learn more about the social-ecological system within which household livelihood strategies are embedded. Rather than using livelihood-focused interventions as a direct behavior-change tool, it may be more appropriate to focus either on enhancing the existing livelihood strategies of those most vulnerable to conservation-imposed resource access restrictions, or use livelihood-focused interventions that establish a clear link to conservation as a means of building good community relations. However, we recommend that the term “alternative livelihood project” is replaced by the broader term “livelihood-focused intervention”. This avoids the implicit assumption that “alternatives” can fully substitute for natural resource-based livelihood activities.