Agricultural commodity production is an important source of livelihood for farmers but is a major driver of tropical deforestation and biodiversity loss. While the socioecological effects of agricultural commodities such as palm oil, cocoa and coffee have been well studied, the effects for other commodities such as cashew (Anacardium occidentale) have received less attention. Global cultivated area for cashew increased rapidly from 526,250 ha in 1980 to ~5.9 million ha in 2018. India is the world’s second largest cashew producer, with cashew farms often occurring adjacent to ever dwindling cover of remnant forests. To mitigate cashew expansion at the expense of forests, it is necessary to understand land use policies that drive the expansion of cashew cultivation and the land management practices in present-day cashew farm systems. Through semi-structured interviews (n=65) and a literature review on agricultural policies in India, we evaluated the role of state-led land use policies in cashew expansion and characterised present-day cashew farming systems in the Sawantwadi-Dodamarg landscape in a biodiversity hotspot in northern Western Ghats. Agricultural subsidies introduced from 1980 to 1990 encouraged cultivar cashew expansion and influenced land use conversion from rice and privately owned forest to cashew. Farmers grew a mix of common and cultivar cashew but the latter was preferred as they produced high yields over short duration, even though they required agrochemical inputs and are more susceptible to pests and wildlife-induced losses. About 80% of farmers had cashew farms that were planted over forests in the past 30 years and expressed interest to continue forest clearing for cultivar cashew expansion. Although farmers incurred high losses from crop depredation on cultivar cashew, they avoided applying for government-sponsored compensation for these losses and chose to expand cultivar cashew into forested areas. Our study deepens the understanding of how government-led agricultural subsidies drive farmers’ uptake of cashew cultivars, farmers’ practices on cashew management, and how these factors at the state and farm level drive deforestation in this landscape. We recommend further research in cashew farming systems to devise sound conservation planning that is inclusive of stakeholders for the protection of privately owned forests and sustainability standards for the cashew industry.