Connections and relationships between conservation practices and community development in relation to rural sustainability have received considerable attention in recent years, especially in developing countries. Among many sound practices around the world, anaerobic digestion (AD) technology has long been encouraged as an alternative source of energy, while contributing to resource conservation and economic development initiatives in developing rural areas. Guided by the theme of sustainable development, the study examined the current applications of AD technology in Meiwan Xincun Village (MWXCV) in Hainan Province, China. Employing a self-administered questionnaire survey, face-to-face interviews and on-site observation, the study explored the diffusion process, current operation and local impacts of AD practice. The study identifies that leadership, education, technical support and local economy are key factors affecting the diffusion of AD, and governmental financial incentives are significantly effective measures to make the technology economically viable for local residents. The technology was found to fit into the rural livelihood system of the village, with considerable environmental and socio-economic benefits. Guided by the leaders of the village, the local residents generally accept and support the practice and are willing to contribute to introducing the technology in and out of the village. Suggestions regarding the utilization and diffusion of AD elsewhere are presented to enhance the potential capacity of the practice to generate benefits across rural Hainan.