Dongjing Chinese folk music, a traditional musical form deeply embedded in the cultural heritage of the Naxi people, combines elements of Han and Naxi cultural traditions. This study explores the role of Dongjing Chinese folk music in enhancing musical literacy and education among students and communities in Lijiang City, Yunnan Province. From ancient Chinese religious practices, Dongjing music has evolved into a significant cultural expression, serving the community's social and religious functions. The research explores how integrating Dongjing music into educational practices can enhance musical literacy and foster cultural preservation. Utilizing a qualitative case study approach, data was collected through semi-structured interviews with sixteen informants, including cultural leaders, musicians, and educators. The analysis revealed that incorporating Dongjing music into curricula significantly improves students' musical literacy by providing practical experience with traditional instruments and fostering a deeper connection to their cultural identity. However, challenges such as globalization and the dominance of Western music education highlight the need for more structured and innovative programs. The study suggests further research on integrating traditional music across different regions, the role of digital technology in music preservation, and the importance of intergenerational transmission in sustaining these musical traditions.