Geographical indications (GIs) are place-based names that convey the geographical origin, as well as the cultural and historical identity, of agricultural products. GIs are unique, in that they provide a means of ensuring that control over production and sales of a product stays within a local area, but at the same time they make use of extralocal markets. Although control over GIs largely rests with local actors, GIs are nested in wider regional, national, and international networks; and the passage from local to extralocal markets introduces new costs and benefits and new relations of power into the supply chain. The degree to which GI protection spurs development and protects local environmental and cultural resources depends on the structure of the GI legislation and on the territorial context in which protection is embedded. Using a commodity-chains approach, I compare two GI production systems, tequila in Mexico and Comté cheese in France, in order to develop a theory of the factors that contribute to more sustainable, equitable GI production systems. I argue that three key differences in the design of the GI schemes help to explain the varying effects of the two cases: (1) the manner in which supply-chain actors define quality, (2) the way that the GI valorizes the terroir of the region, and (3) the strength and cohesion that the collective organizing body exhibits. Moreover, the institutional and political context in which GI supply chains “touch down” plays a critical role. Contrary to a conceptualization of GIs as compatible with a purely market-oriented model, my comparison of these two cases indicates that some level of state involvement, in order to level the playing field and empower small farmers, is a necessary, although not sufficient, precondition for successful and sustainable GIs.