Water is unevenly distributed in time and space in Yunnan Province and the discrepancy between the demand and supply is becoming more and more prominent with the fast development of economy and society. In order to provide a theoretical basis for the rational utilization of water resources in Yunnan province, the water resources carrying capacity was evaluated and its obstacle factors were diagnosed. 21 indices were selected from three subsystems of water resources, ecology and environment, economy and society to sonstruct an evaluation index system, and then the water resources carrying capacity of Yunnan Province from 2005-2018 was estimated based on grey relational analysis and technique for order preference by similarity to an ideal solution (GRA-TOPSIS), its main obstacle factors were diagnosed using obstacle degree model. The results show that the developing trend of water resources carrying capacity in Yunnan province from 2005 to 2018 was on the rise, with the composite index rising from 0.468 4 to 0.612 3, which increasd 30.72%. The developing trend and increasing amplitude varied greatly from one subsystem to another; however, the water resources carrying capacity index of the water resources subsystem and ecology and environment subsystem decreased significantly during 2010-2011. The proportion of reclaimed water, population density, proportion of ecological water consumption, proportion of tertiary industry in GDP, total wastewater discharge amount, COD discharge in wastewater and water resources per capita were diagnosed to be the key obstacles for the improvement of water resources carrying capacity in Yunnan Province. It is suggested that measures of industrial structure optimization, improvement of the utilization rate of water resources and further promotion of the protection of ecological environment can be carried out to improve the carrying capacity of water resources and ensure economic and social development of the study area.