Indian agriculture is at crossroads and the traditional crop sector has reached a plateau. Rising cost of production and rising food prices, has brought the issue of food security and need for improving food production back to the forefront of policy makers' mind. Pursuing this line of thought, proposal to diversify towards more profitable, export oriented medicinal and aromatic plants (MAPs), presents itself as a viable option for farmers in the hill state of Uttarakhand, India. Firstly, through a review of the existing literature this study strives to develop a 'view from the above' point-of-view on the structural issues of medicinal plants as an 'economic sector'. Secondly, by investigating the local level 'realities' of medicinal plants, their production and impacts on livelihoods, the paper also attempts to probes the threats and problems associated with medicinal plant resources. Thirdly, this study attempts to examine the production, financial and marketing constraints in the business of MAPs in Uttarakhand and reviews the 'Value Chain' of MAPs through an in-depth sector study. Finally, a 'Stakeholders analysis' of the existing formal and informal institutions, their linkages and interplay at various levels is undertaken through detailed conversations with stakeholders and analysis of the existing marketing channels. Overall, three strategies have clearly emerged as the most prominent in ensuring transformation of the medicinal plant sector - Conservation, Cultivation and Coordination between stakeholders.