Forest cover change is one of the most important land cover change processes globally, and old-growth forests continue to disappear despite many efforts to protect them. At the same time, many countries are on a trajectory of increasing forest cover, and secondary, plantation, and scrub forests are a growing proportion of global forest cover. Remote sensing is a crucial tool for understanding how forests change in response to forest protection strategies and economic development, but most forest monitoring with satellite imagery does not distinguish old-growth forest from other forest types. Our goal was to measure changes in forest types, and especially old-growth forests, in the biodiversity hotspot of northwest Yunnan in southwest China. Northwest Yunnan is one of the poorest regions in China, and since the 1990s, the Chinese government has legislated strong forest protection and fostered the growth of ecotourism-based economic development. We used Landsat TM/ETM+ and MSS images, Support Vector Machines, and a multi-temporal composite classification technique to analyze change in forest types and the loss of old-growth forest in three distinct periods of forestry policy and ecotourism development from 1974 to 2009. Our analysis showed that logging rates decreased substantially from 1974 to 2009, and the proportion of forest cover increased from 62% in 1990 to 64% in 2009. However, clearing of high-diversity old-growth forest accelerated, from approximately 1100 hectares/year before the logging ban (1990 to 1999), to 1550 hectares/year after the logging ban (1999 to 2009). Paradoxically, old-growth forest clearing accelerated most rapidly where ecotourism was most prominent. Despite increasing overall forest cover, the proportion of old-growth forests declined from 26% in 1990, to 20% in 2009. The majority of forests cleared from 1974 to 1990 returned to either a non-forested land cover type (14%) or non-pine scrub forest (66%) in 2009, and our results suggest that most non-pine scrub forest was not on a successional trajectory towards high-diversity forest stands. That means that despite increasing forest cover, biodiversity likely continues to decline, a trend obscured by simple forest versus non-forest accounting. It also means that rapid development may pose inherent risks to biodiversity, since our study area arguably represents a “best-case scenario” for balancing development with maintenance of biodiversity, given strong forest protection policies and an emphasis on ecotourism development.