Recently, energy consumption in rural areas of China is shifting from traditional natural energy to high-quality commercial energy and renewable energy; this shift may help to reduce the ecological stressors of rural areas. Nonetheless, the process of firewood substitution is relatively slow in some mountainous areas of China. Existing studies are focused on the key factors that influence rural households in the choice of energy resources, although it is still unclear what drives the households' decision-making on energy resources. For example, there is a significant controversy regarding the effect that the off-farm employment has on firewood substitution. Furthermore, existing household models are not suitable for the mountainous areas of China, though these models can simulate energy consumption decisions of a rural household and are helpful for elucidation of the relationship between firewood consumption behavior and off-farm employment. Chongqing Municipality is located in the upper reaches of the Yangtze River, and the rural households there typically use firewood as their main energy resource. Firewood consumption, however, has a negative effect on the already fragile ecological environment in the region. Besides, firewood collection contradicts the policy of forest conservation. Therefore, firewood substitution is a hot area of research because understanding what/how various factors affect firewood substitution is necessary for policy-making on forest conservation. To meet this challenge, we built an inseparable household model to simulate the balance of labor allocation and energy consumption in a rural household, taking into account the shadow price of off-farm employment, firewood collection, and leisure. Tools of participatory rural appraisal (PRA) were utilized in this study, in accordance with field surveys of 1015 households in the "two wings" region of Chongqing Municipality. A Tobit model was then used to conduct both qualitative and quantitative analyses on the factors influencing firewood consumption per capita in 2011 to test the hypothesis proposed by the household model. Our results show that 1) Rural households gradually increased their use of high-quality commercial energy and renewable energy during 2003-2011. Nevertheless, due to the vast supplies, firewood is still the widely used energy resource, where the percentage of households using firewood is 91.43% and the consumption of firewood per capita was 794.97 kg consumed energy (kgce) in 2011. 2) Off-farm employment significantly reduced firewood consumption per capita via rural labor migration and the improvement of off-farm wages. 3) Other variables also have significant effects on firewood consumption per capita. For instance, among the statistically significant factors are the age of the household head, the livestock number per capita, and distance to market; these factors positively affect firewood consumption per capita. In contrast, the number of household appliances, other income (e.g., government subsidies and support from relatives), and accessible biogas have negative effects. 4) The Wulong County has a negative impact on firewood consumption per capita due to the biogas policy, and so does the Wushan County (due to rich coal resources). We propose several targeted strategies for acceleration of firewood substitution according to existing research; these strategies include improvement of off-farm wages to speed up the transfer of rural labor to off-farm employment, completion of the social security system to improve the purchasing power among the elderly for the use of high-quality commercial energy and renewable energy, increasing the subsidies for electricity access, and promotion of renewable energy.