Soil and water conservation (SWC) measures are needed to control erosion and sustain agricultural production in mountain regions. This study assessed the costs and benefits of indigenous SWC measures in a predominantly rural watershed in Sikkim Himalaya, India, from 2009 to 2010. Physical data were obtained through field measurements of soil erosion and runoff in plots with and without SWC measures; further information was collected through a structured questionnaire survey of 150 farm households. Major costs and benefits of various measures implemented in the study area were quantified using net present value, internal rate of return, time horizon, discount rate, payback period, and sensitivity analysis. For a 10-year period and with a 6% discount rate, all the practices were found to have a positive net present value and to help ensure economic and environmental sustainability. The sensitivity analysis showed that the most widespread SWC practices are worth implementing. Some practices not only prevented nutrient loss and retained soil moisture but also provided additional income and increased crop yield. Our findings suggest that agroforestry and vegetative barriers are the most favorable practices.