This paper aimed to analyze the relationship between agricultural prices and government policies related to deforestation within the states of Brazilian Legal Amazon, from 1999 to 2011. We utilized data at state level in a panel data model and a method to measure the net effect of policies over deforestation. Results point out that deforestation in the Brazilian Legal Amazon is more correlated with agricultural prices than government spending on farm credit, agriculture and transportation. Despite this correlation, new command and control policies focused on areas where deforestation were more likely to happen were successful, mainly in Mato Grosso State. Finally, we conclude that deforestation is associated with both groups of variables, agriculture prices and policies.