The Lincoln National Forest surrounds Cloudcroft with dense stands of ponderosa pine, Douglas fir, and Engelmann spruce. Several trailheads are accessible from the village or within a short drive. The Osha Trail is a moderate 3.2-mile loop through mixed forest with views down toward the White Sands basin far below. The Rim Trail, which runs along the edge of the mountain escarpment, offers the most dramatic views — on clear days you can see the white gypsum expanse of White Sands National Park glowing on the valley floor.
Wildlife in the forest includes mule deer, wild turkey, black bears, and a small population of elk. The Sacramento red squirrel, a subspecies unique to these mountains, is often seen in the higher stands of spruce and fir. Birding is excellent in spring and summer, with Mexican spotted owls using the old-growth forest.