Indonesia is rapidly losing its forests. In some measure this is due to the extensive illegal logging networks operating in heavily forested districts across the archipelago. While the extent of this critical problem is now understood, insufficient attention has been paid to its underlying political and social causes at the district level. Based on fieldwork carried out in Sumatra during 1996-1999, this article examines the emergence and operation of logging networks in one district. This article argues that the roots of illegal logging can be found in the shifting economic and political interests of diverse actors at the district, subdistrict, and village levels. As these actors enter into exchanges and accommodations around logging, they create the de facto institutional arrangements governing timber operations. After examining the impact of political and economic changes on this phenomena, this article concludes that the logging epidemic has complex, multidimensional causes that allow for no easy remedies. Moreover, as many of the dynamics described here will continue to predominate after Indonesia implements new decentralization laws, this ensures that the informal system of exchange and accommodation described here will continue to shape forest outcomes.