After the GATT agreements in 1986, which removed the existing external protection on wine market, and with demand developing towards a qualitative level, the European wine sector has been subjected to a continuous transformation to accomplish that main objective. To give producers the chance to bring production into line with market developments and to allow the sector to become permanently competitive, the European Commission established the Council Regulation (EC) No. 1493/1999) on the common market organization in wine, later adopted in the 2003 CAP reform. Among other measures, this regulation finances the restructuring of a large part of present vineyards by adopting new farming systems (EC Council Regulation No. 1227/2000), supporting actions as soil preparation, which includes land levelling and terracing. Traditional vineyard areas in Mediterranean mountain environments, with subsistence agriculture and farming systems based on man and animal labour, have taken advantage of the new market opportunities in the wine sector and of this policy as well, and have changed to a market-oriented farming strategy. It has involved the construction of terraces on hillslopes using heavy machinery with the objective of crop mechanization, which has supposed important changes in soils and landscape. An example of this situation is the Priorat region (Catalonia, NE Spain), where vineyards have been cultivated on hillslopes by human and animal labour since the 12th century. Since the early 1990s the region has been undergoing major changes arising from new wine market opportunities and later by vineyard conversion and restructuring EU policy, which subsidizes up to 50% of the cost. In this paper we consider two aspects of the changes that modern farming systems are causing in the region: (a) land use changes after the coming into practice of the EU vineyard restructuring policy and (b) terrain morphology changes due to land terracing and related geomorphological effects. The results show high terracing rates (22.6–36.1 ha year −1) in the study period (1998–2006), accompanied by huge land movements (a cutting rate of about 5475 m 3 ha −1). Bad design of terraces has led to the collapse of benches and borders, affecting about 3.5% of the newly planted area. These effects question the suitability of the EU CAP for vineyard restructuring in Mediterranean mountain environments, revealing that although farmers comply with environmental protection requirements, CAP support is not accomplishing the objectives for which was conceived: the protection of the environment by the reduction of impacts of the agricultural activities.