India has a vast and broad collection of medicinal plants that have long been used in its healthcare system, especially by rural and indigenous people. The application of medicinal plants that have their roots in traditional knowledge systems has made a significant contribution to sustainable healthcare by providing natural, affordable, and culturally appropriate treatment solutions. The ethnobotanical importance of medicinal plants in India is discussed in this review, which also highlights the plants’ pharmacological potential and impact on sustainable healthcare practices. Because it is easily available and has lower side effects than synthetic alternatives, plant-based medicine is still used. However, the conservation and incorporation of traditional medical knowledge are endangered by issues including habitat degradation, overharvesting, and the requirement for scientific proof. Additionally, policy frameworks that ensure the standardization, control, and ethical use of medicinal plant resources are becoming more and more important to close the gap between traditional and modern healthcare systems. Solving these problems will increase the sustainable use of medicinal plants for future medical needs and at the same time help preserve indigenous knowledge. This article discusses the importance of maintaining ethnobotanical traditions, along with promoting the use of medicinal plants in a sustainable and science-supported modern healthcare system.