In rural Alaskan communities, high economic, social, and ecological costs are associated with fossil fuel use for power generation. Local concerns regarding fuel prices, environmental contamination, and the effects of global climate change have resulted in increased interest in renewable energy sources. In this study we assessed the feasibility of switching from fossil fuels to wood energy in rural Alaskan villages in forested regions of interior Alaska. Modeling results based on recent data on rural energy use, demographics, economics, and forest dynamics indicated that the installation costs of biomass systems would be recouped within 10 years for at least 21 communities in the region. In addition, results showed that all but the largest remote communities in the interior could meet all their electrical demand and some heating needs with a sustainable harvest of biomass within a radius of 10 km of the village. Marketable carbon credits may add an additional incentive for fuel conversion, particularly if U.S. prices eventually rise to match European levels. Biomass conversion also offers potential social benefits of providing local employment, retaining money locally, and reducing the risk of catastrophic wildfire near human habitation. This analysis demonstrated that conversion to biomass fuels is economically viable and socially beneficial for many villages across interior Alaska.