A new survey by the organisation found that foot-and-mouth outbreaks and a lack of young people have profoundly affected the viability of hill farming.
"Current support for hill farming is inadequate to sustain these assets. New funding mechanisms are required as part of the reform of the Common Agricultural Policy from 2013," said the report.
The inquiry found a lack of joined-up thinking, with too many of the well-intentioned initiatives having unintended negative consequences for communities, farmers and land-owners alike.
To remedy this, the Commission for Rural Communities recommends the appointment of a single individual, who would be responsible for this new uplands strategy.
Initiatives are needed to bring together the public and private sectors to create markets for uplands natural resources, like carbon and water, for the benefit of local communities.
The report also names farming as central to maintaining the landscape and managing natural resources.
Chairman of the Commission for Rural Communities Dr Stuart Burgess said: "We have recognised that farmers and land managers play vital roles in looking after these assets, and that many more people enable them to do so as part of the wider uplands’ economy and society.
"There needs to be a fundamental shift in the way the uplands are viewed. Rather than be seen as areas of disadvantage, they should be considered for their high potential to offer significant public benefits.
"The continued availability of these benefits is, however, bound up with the wider future of the uplands, and this now needs to be properly recognised.
"We found much evidence of initiative and enterprise in the uplands. However, there are threats to this strong sense of community and to the future for the uplands."