This article provides an in-depth analysis of the current state, challenges, and development potential of the Yi ethnic medicine industry. At present, the industry faces a range of difficulties, including a shortage of skilled personnel, lagging research, lack of standardization, increasing market competition, and weak intellectual property protection. These issues severely hinder the further development of the industry. In response, this paper offers a series of strategic recommendations: firstly, strengthening talent development and research innovation; secondly, accelerating the standardization and normalization of the industry; thirdly, actively expanding the scope of market applications; and finally, seeking policy support to promote collaborative cooperation across the industry.