The medicinal properties of plant species have made an outstanding contribution in the origin and evolution of many traditional herbal therapies. These traditional knowledge systems have started to disappear with the passage of time due to scarcity of written documents and relatively low income in these traditions. Over the past few years, however, the medicinal plants have regained a wide recognition due to an escalating faith in herbal medicine in view of its lesser side effects compared to allopathic medicine in addition the necessity of meeting the requirements of medicine for an increasing human population. Through the realization of the continuous erosion of traditional knowledge of plants used for medicine in the past and the renewed interest at the present time, a need existed to review this valuable knowledge of medicinal plants with the purpose of developing medicinal plants sectors across the different states in India. Our major objectives therefore were to explore the potential in medicinal plants resources, to understand the challenges and opportunities with the medicinal plants sector, and also to suggest recommendations based upon the present state of knowledge for the establishment and smooth functioning of the medicinal plants sector along with improving the living standards of the underprivileged communities. The review reveals that northern India harbors a rich diversity of valuable medicinal plants, and attempts are being made at different levels for sustainable utilization of this resource in order to develop the medicinal plants sector.