The 2006 FAO report concerning the environmental impact of the livestock sector has generated scientific debate, especially considering the context of global warming and the need to provide animal products to a growing world population. However, this sector differs widely in terms of environmental context, production targets, degree of intensification and cultural role. The traditional breeding systems in the Alps were largely based on the use of meadows and pastures and produced not only milk and meat but also other fundamental positive externalities and ecosystem services, such as conservation of genetic resources, water flow regulation, pollination, climate regulation, landscape maintenance, recreation and ecotourism and cultural heritage. In recent decades, the mountain livestock, mainly represented by dairy cattle, has been affected by a dramatic reduction of farms, a strong increase of animals per farm, an increase in indoor production systems, more extensive use of specialised non-indigenous cattle breeds and the increasing use of extra-farm concentrates instead of meadows and pastures for fodder. This paper firstly describes the livestock sector in the Italian Alps and analyses the most important factors affecting their sustainability. Secondly, it discusses the need to assess the ecosystem services offered by forage-based livestock systems in mountains with particular attention to greenhouse gas emission and its mitigation by carbon sequestration. In conclusion, comparison between the different elements of the environmental sustainability of mountain livestock systems must be based on a comprehensive overview of the relationships among animal husbandry, environment and socio-economic context.