(Sub)tropical highlands of the world have been densely populated and intensively cropped. Agricultural sustainability problems resulting from soil erosion and fertility decline have arisen all over this agro-ecological zone. This article considers practices that would sustain higher and stable yields for wheat and maize in such a region. Conservation tillage in its version of permanent bed planting under zero tillage with crop residue retention has been proposed as an alternative production system. A long-term field experiment comparing permanent and tilled beds with different residue management under rainfed conditions was started at El Batán, Mexico (2240 masl; 19.31° N, 98.50° W; Cumulic Phaeozem) in 1999. Little is known about how permanent beds might affect soil quality compared to conventionally tilled beds. The objective therefore has been to determine the soil quality status of the different management practices. Infiltration, aggregate stability and soil nutrient status were measured after more than 4 years of practice. The research indicates that permanent bed planting can be a sustainable production alternative for the (sub)tropical highlands. The extensive tillage with its associated high costs and long turn-around-time can be reduced by the use of permanently raised beds with tied ridges. The results also indicate that at least partial surface residue retention is needed to insure long-term production sustainability. Permanent beds with at least partial residue retention show high soil quality, tilled beds intermediate. Permanent beds without residue retention, however, means an unsustainable practice leading to low crop performance and soil and environmental degradation.