||This study is an ethnography about the Lahu, an ethnic minority in southwestern Yunnan. It is based on anthropological research conducted during the past ten years and analysis of historical archives and documents. Its focus is the relationship between state expansion and penetration and the marginalization of ethnic minorities. The point of departure is a central issue in the existing literature on state-minority relations in post-revolution China, that is, how ethnic minorities have responded and adapted to the identity politics orchestrated by the state to shape and control their social life. Unlike some other minority groups where the ethnic elites have acted as brokers between the state and the local society by reconstructing the official discourse on ethnicity and leveraging for resources while implementing state policies, such double-agency is conspicuously absent among the Lahu. The study seeks to explain such difference and explore its implications and consequences. The main findings are as follows. First, the ethnic identity of the Lahu was created and accentuated largely through political mobilization in a religiously based resistance movement against Han migration and state expansion during the Qing dynasty. Second, the long history of resistance led the state to suppress the indigenous elite and rely on Han cadres to govern local society. Third, in the reform era the hijacking of local political power and representation by a group of new political operators—the so called “Lahu-minded” Han cadres, coupled with evolutionist discourse on ethnic relations, has not only perpetuated poverty but led to serious social crisis in local society, resulting in gender imbalance, alcoholism, suicide, and more fundamentally disintegration of the Lahu cultural identity.