Yak farming is the main livelihood source for the high altitude communities in the eastern Himalaya. With increasing access to modern facilities, market opportunities and changes in the legal framework, pastoral systems in the Himalaya are undergoing an unprecedented change. Questionnaire-based qualitative surveys were conducted in five villages of northern Bhutan, to understand how the recent changes in the legal framework for Cordyceps (known as caterpillar fungus) collection have caused specific changes in yak farming practices. Survey results revealed that women were increasingly involved in yak husbandry and household work, after the legalization of Cordyceps collection in 2004. After legalization, the Cordyceps business overtook yak farming as the main income-earning activity. Post-legalization saw a decline in the overall grassland condition and most herders migrated a month earlier to the summer grazing land. Legalization also led to increase in the number of households buying commercial feeds for yaks. Yak mortality increased and fodder scarcity became more acute, which is a major constraint to yak farming. Despite the good income from the Cordyceps business, yak farming was the preferred earning activity over Cordyceps due to herders’ confidence in yak farming as a reliable source of livelihood. Of several measures proposed by yak herders to improve yak farming, increasing grassland productivity and providing subsidies for feed purchases were the most important measures. The study concluded that yak farming practices have undergone a few positive but more undesirable changes after the legalization of Cordyceps collection in 2004. The results suggest multi-disciplinary approaches to address adequately the emerging issues of yak farming e.g. introducing schemes to make yak farming attractive to the mountain youth. The paper suggests interventions to strengthen yak farming and help herders make informed choices in the high altitude rangelands of Bhutan. Essentially, yak farming is at a crossroads where a firm decision is needed to either encourage and strengthen the farming practices or witness the gradual extinction of the age-old tradition.