The fish Sinocyclocheilus grahami is one of the indicative and endemic species in the Dianchi Lake ecosystem. As a result of pollution and invasion of exotic fishes, the fish had disappeared from Dianchi Lake since 1986 and only a few small populations survive in springs and streams around the lake. Due to the endangered status and special scientific value, S.grahami was listed as the second class protective animal of China in 1989. The importance of S. grahami and the indigenous biodiversity of Dianchi Lake were recognized by the Global Environment Foundation (GEF) /World Bank and Yunnan Development & Reform Committee. Therefore a special grant was set up to restore and conserve the indigenous biodiversity of Dianchi Lake. The artificial breeding of S. grahami is a part of the targeted activities. Two successful breeding experiments were achieved using five females plus six males up to early March 2007. Approximately 1600 eggs were collected, of which 1320 eggs fertilized using the dry-fertilizing method. The mean fertilization rate was 73%. Approximately 480 fish fry was hatched and the mean hatching rate was 36%. After 10 days of cultivation, 95% fingerlings survived and their body lengths were up to 8- 12 mm. The importance of the artificial breeding success of S. grahami could be summarized as following: effectively protecting the fish from extinction; releasing the fish fry back to appropriate water body of the lake could help to restore the indigenous biodiversity of Dianchi Lake; facilitating the shift of local fish cultivation from the present non-indigenous to the future indigenous fishery.