In China, traditional markets are considered as important places for trading of medicinal plants harvested by rural villagers, which also play a social role of exchanging traditional use of herbal medicine among different cultural and social groups at local level. Market survey is often engaged in ethnobotanical studies for documenting locally used herbal plants and associated traditional knowledge. Information collected from market survey is also useful for plant conservation in the habitat areas. However, information on the market traded medicinal plants is not well documented from traditional markets in Honghe Prefecture, Yunnan. The study aimed to look into medicinal plants that are used by local people for curing various ailments. Ethnobotanical market survey methods, interviews, Participatory Action Research (PAR) and field visits were planned to elicit information on the uses of various medicinal plants. It was found that 216 plant species are commonly used by local people for curing various diseases, of which 173 species (80.1%) are wild plants and 43 species (19.9%) are home garden plants. A total of 278 records of medical uses in 60 herbal recipes for the treatment of 16 types of common diseases were recorded. In most of the recipes recorded, digestion diseases (30.6%) were used. The rest are rheumatological diseases (13.0%), respiratory system diseases (10.4%), infectious diseases (7.9%) and surgery uses (7.9%). The knowledge about the number of medicinal plants available in that area and used by interviewees was positively correlated with the threats on medicinal plants in the wild habitats of the study area, indicating that the diversity of medicinal plants and the associated traditional knowledge trends to disappear in the area.