The purpose of this study was to examine the relationships between expansion of rural business and characteristics of local agriculture in hilly and mountainous areas. To capture the relationships, we focused on the roles of rural community-level agglomeration of rural business in the geographic range of communities organized during the Meiji Period in Shimane Prefecture. Using community data obtained from the Census of Agriculture and Forestry, and data from the direct payment policy to the hilly and mountainous areas, we examined the relationships in terms of community-level cooperation. Then, we confirmed that off-farm cooperation, community business factors, flexibilities of labor allocation, and farmland utilization positively contributed to change in rural business. In addition, we also confirmed that restrictive conditions in the community, shared use of machines, and geographical factors such as mountainous settlements negatively contributed to the change. These findings indicate it is important to connect the interregional and intra human resources to improve sustainability in hilly and mountainous areas. JEL Classification:Q13, Q18, R11