Abstract: China′s basic medical insurance system (BMIS) for urban and rural residents is an important part of medical security system with Chinese characteristics. Main achievements and basic experience of the BMIS have been widely recognized by the international community. The study describes the development process of the BMIS changing gradually from an independent system to an integration system. The study summarizes experiences and effects of the system as following: organization, management and financing dominated by the government; full coverage to general populations including those with flexible employment; construction of a multi-level medical insurance system; multi-dimensional regulatory mechanism; and the innovation of social service management. Main challenges and countermeasures of improvement for the BMIS are also discussed.