Climate change mitigation by increased paper recycling can alleviate the two-sided pressure on the Swedish forest sector: supplying growing demands for wood-based products and increasing the forest carbon sink. This study assesses two scenarios for making use of a reduced demand for primary pulp resulting from an increased paper recycling rate in Sweden, from the present 72% to 78%. A Conservation scenario uses the saved primary pulp to reduce pulplog harvests so as to increase the forest carbon sink concomitant with constant overall wood product supply. In contrast, a Substitution scenario uses the saved primary pulp to produce man-made cellulosic fibers (MMCF) from dissolving pulp replacing cotton fiber, implying increased overall wood product supply. Our results suggest that utilizing efficiency gains in paper recycling to reduce pulplog harvests is better from a climate change mitigation perspective than producing additional MMCF to substitute cotton fiber. This conclusion holds even when assuming the use of by-products from dissolving pulp making and an indirect increase in MMCF availability. Hence, unless joint improvements across the value chain materialize, the best climate change mitigation option from increased paper recycling in Sweden would seemingly be to reduce fellings rather than producing additional MMCF.