Objective To explore the factors influencing the steady transmission of leprosy as indicated by new case detection rate in Qiubei county, Yunnan province, China despite the implementation of MDT for the last 25 years. Methods Information related to case-finding was collected. ELISA and PCR were applied to detect anti-PGL-1 antibody in sera and Mycobacterium leprae in nasal secretions respectively, in leprosy patients, their household contacts and the general population. M. leprae by PCR was also detected from water in the highly endemic villages. VNTR typing was performed to explore the mode and chain of transmission of M. leprae. Results Prior to 2001, the proportion of new cases detected from the examination of household contacts of leprosy patients was low (number, compared to), while the proportion of patients whose identification was delayed by more than 2 years, was high (number, compared to). Qualities of these two indicators has been improved, along with the improvement of leprosy control program since 2001, but the detection rates has been steady at 4-5/ 100 000 during 1986-2010. The PGL-1 seropositivity rate was 20%-30% in general population, with the peak rate (30%) detected in the teenage population in the endemic villages. In addition to the fact that M. leprae was detected in nasal secretion from patients, their contacts and from water, the M. leprae VNTR genotypes were found to be highly similar between skin biopsy and nasal secretion in untreated cases. Families with multi-cases were clustered and located in the Northern part of the County, and the genotypes of M. leprae were identical within those families. The percentage of clusters was considerably higher in Northern rather than Southern parts of the County. Conclusion Results from this molecular study demonstrated evidence that transmission of leprosy within the families and in the endemic-villages was severe. M. leprae were detected in waters from the endemic villages and others areas which might have a relation to the continued transmission of leprosy.