With regard to the characteristics of border area, complex terrain, poor economic development level and imperfect water supply facilities in Yunnan Province and combined with the characteristics of water supply industry and the process of its marketization reform, the correlation analysis of adaptability of marketization reform of urban water supply industry in Yunnan Province is conducted from the aspects of infrastructures, policies and regulations, regulatory support and water price mechanism. The following countermeasures are proposed: the marketization reform of urban water supply industry in Yunnan Province should be based on comprehensive water supply facilities, the reform mode suitable for the conditions in Yunnan Province should be explored by using the pilot method, the industry competition should be enhanced, the market oriented reform should be actively and steadily promoted, and the market competition and formation mechanism of water price should be gradually formed.