Poorly planned, large‐scale ecological restoration projects may displace agricultural activities and potentially lead to the clearance of native vegetation elsewhere, with associated impacts on biodiversity and ecosystem services. Yet few studies have considered these risks and the ways in which restoration can increase competition for land. Here, we address this issue by examining whether large‐scale restoration of the Brazilian Atlantic Forest could displace cattle production, as a result of land shortages. Although the risks of displacement are indeed high when reforestation is planned in areas with high cattle productivity, we discuss how these risks can be minimized through a combination of productivity increases, a regional restoration planning framework, and the prioritization of marginal agricultural land for restoration. We also consider how restoration can, in some circumstances, be made more economically sustainable by incorporating income‐generating activities such as exploitation of timber and non‐timber forest products, certification, and payments for ecosystem services.