As ambitious new targets to increase area-based conservation are discussed, there is a growing concern that such an expansion might ignore or marginalize local people. How to set top-down priorities to implement new protected areas that reconcile local peoples’ interaction with and dependence on biodiversity remains a challenge. The Gran Chaco, a global hotspot of deforestation and biodiversity loss, faces the dual challenge of expanding area-based conservation while helping to transition to more sustainable natural resource use in order to maintain traditional livelihoods. We used a literature review to identify species that are important for local communities’ livelihoods and then we compared conservation prioritization schemes that sought to identify priority areas for threatened species, versus priority areas for the same species plus species that underpin local livelihoods. We found that current protected areas insufficiently protect threatened species, but that a modest expansion would boost the representativeness of conservation-relevant species almost threefold. Importantly, we found a considerable overlap between priority areas for species of conservation concern and those important for people. This suggests major potential for area-based conservation to leverage co-benefits between conservation and livelihood goals, provided that new conservation initiatives are inclusive and consider the needs and customary rights of local communities. Protected areas that emphasize multiple uses and community-based management appear particularly promising to deliver co-benefits for conservation and development in the Chaco; however, those areas remain scarce. Our approach enables the consideration and empowerment of local people as key actors in conservation planning.