Sheep production is a common activity in family farms that develop mixed farming in developing countries in South America. In the area known as the Patagonia, it is possible to find this type of farm in isolated areas with a temperate climate, where sheep production takes place in small and medium-sized flocks managed with family labor. In these systems, obtaining animal protein for family consumption and the sale of surpluses is the main objective of farmers. The Chilean Patagonia is an area that stands out for its tourist attractions. This feature has been used at the government level to develop production and commercial linkage and improvement programs. However, the proper application of these programs needs to characterize sheep production systems, define groups, determine similarities and differences among them, and identify individual or joint adaptation strategies. Thus, the objective of this research was to characterize sheep farming in an extreme mountain area in the Chilean Patagonia and provide a typology of sheep production systems, focusing on the socio-productive aspects of family farms. Within the province of Palena, the study area corresponded to the communities of Palena and Futaleufú, where a survey was given to a sample of 172 sheep farmers. Through multivariate analysis methodologies, four groups of sheep production systems were identified. The main differences between systems were farm surface, surface destined for sheep, type, duration, and supplementation strategy and presence of purebred sheep. Sheep production in extreme areas contributes to rural families' livelihood by being part of an integrated system of activities that naturally uses circular economy strategies and sustainable practices. Geographical isolation limits the marketing channels, generating that the surpluses produced are sold locally. Given the government strategies to support the study area and the strong tourist component of governmental assistance, the sheep farmers need to modify their management strategies.