Replacement of crop landraces by modern varieties is thought to cause diversity loss. We studied genetic erosion in maize within a model system; modernized smallholder agriculture in southern Mexico. The local seed supply was described through interviews and in situ seed collection. In spite of the dominance of commercial seed, the informal seed system was found to persist. True landraces were rare and most informal seed was derived from modern varieties (creolized). Seed lots were characterized for agronomical traits and molecular markers. We avoided the problem of non-consistent nomenclature by taking individual seed lots as the basis for diversity inference. We defined diversity as the weighted average distance between seed lots. Diversity was calculated for subsets of the seed supply to assess the impact of replacing traditional landraces with any of these subsets. Results were different for molecular markers, ear- and vegetative/flowering traits. Nonetheless, creolized varieties showed low diversity for all traits. These varieties were distinct from traditional landraces and little differentiated from their ancestral stocks. Although adoption of creolized maize into the informal seed system has lowered diversity as compared to traditional landraces, genetic erosion was moderated by the distinct features offered by modern varieties.