A Red List of Deforestation was published by Brazil's federal government in 2008, listing 36 municipalities with the highest rates of deforestation in the Amazon as a policy measure to prioritize efforts to combat deforestation. Here, we examine the reaction of a municipality to the decentralization policy represented by the Red List. We analyze the case of Paragominas, a municipality in the state of Pará, in the eastern Brazilian Amazon. Since being removed from the Red List in April 2010 Paragominas has swapped infamy for fame, and has become widely renowned in Brazilian policy discourse and the public media as a successful example of controlling deforestation. In this study, we analyze the development of the Green Municipality or Município Verde (MV) project, a novel governance arrangement that brought together municipal, state, and federal government as well as local farmers Unions and Associations, and regionally active nongovernmental organizations. We identify key actors and institutions involved in the process, and try to better understand the preexisting conditions that set the groundwork for the MV initiative. Finally, we evaluate the effectiveness of this policy in controlling deforestation and achieving environmental compliance within different social groups.