The implementation of climate-smart policies to enhance carbon sequestration and reduce emissions is being encouraged worldwide to fight climate change. Afforestation practices and rewilding initiatives are climate-smart examples suggested to tackle these issues. In contrast, fire-smart approaches, by stimulating traditional farmland activities or agroforestry practices, could also assist climate regulation while protecting biodiversity. However, there is scarce information concerning the potential impacts of these alternative land management strategies on climate regulation ecosystem services and biodiversity conservation. As such, this work simulates future effects of different land management strategies in the Transboundary Biosphere Reserve of Meseta Ibérica (Portugal-Spain). Climate-smart ('Afforestation', 'Rewilding') and fire-smart ('Farmland recovery', 'Agroforestry recovery') scenarios were modelled over a period of 60 years (1990–2050), and their impacts on climate regulation services were evaluated. Species distribution models for 207 vertebrates were built and future gains/losses in climate-habitat suitability were quantified. Results suggest climate-smart policies as the best for climate regulation (0.98 Mg C ha−1 yr−1 of mean carbon sequestration increase and 6801.5 M€ of avoided economic losses in 2020–2050 under Afforestation scenarios), while providing the largest habitat gains for threatened species (around 50% for endangered and critically endangered species under Rewilding scenarios). Fire-smart scenarios also benefit carbon regulation services (0.82 Mg C ha−1 yr−1 of mean carbon sequestration increase and 3476.3 M€ of avoided economic losses in 2020–2050 under Agroforestry scenarios), benefiting the majority of open-habitat species. This study highlights the main challenges concerning management policies in European rural mountains, while informing decision-makers regarding landscape planning under global change.