There are a number of different ethnic groups living in Lijiang.  The Old Town was originally one third Naxi, one third Bai and one third Tibetan.  The Tibetans were kicked out to the outskirts of town as the "Old" Town expanded.  The plaza where the water wheels and the UNESCO signs are today used to be all Tibetan homes.  Joseph Rock used to live next to where the Grand Hotel is now located, while the Grand Hotel (now run by a Thai hotel group) used to be on an in-town estate owned by a wealthy Tibetan family.  The daughter of that family, which lost the house and all their wealth during the Cultural Revolution, still lives in Lijiang, in a much smaller house on Beimenpo, and she can be found dancing at Highland Gale, the Tibetan restaurant and dance house near where she grew up.  Lijiang has a reasonably sizable Tibetan community from Deqing (that's the area around the Meili Glacier, particularly famous for the local singing and xuanzi playing, and the energy of the dancing).  There are also a number of Tibetans from the Weixi/Tacheng area and from Lugu Lake.  The younger Tibetans all join each other for a night of dancing during weddings;  the older Tibetans get together three or four times each month and dance all morning and all afternoon.  Tibetans are very fit.  Guo zhuang dances are open for anyone to join in.  People who want to try out their dancing skills are warmly welcomed.  If you want to learn the steps ahead of time, stop by Highland Gale and get dancing lessons.  Highland Gale features very complex professional dances (performances nightly) as well as guo zhuang dances for everyone to join.  Tibetans love respect, and to make friends with a Tibetan all you have to do is show respect, and a little interest in your new friend.

The Lisu are another colorful and very interesting ethnic group in Lijiang, well worth getting to know.  Lisu live mainly in the Liming area (the Danxia scenery is fabulous here, well worth a visit).  Stop and chat with Lisu locals and you can easily find yourself invited over to a meal.  don't miss it, but try to reciprocate with a gift of something hard to find in the area, or otherwise a great big bag of fruit.  The Lisu in the Liming area are mostly Christian.  It's a good place to visit church on Sunday!  There are also Lisu living in multi-cultural Tacheng, northwest of Lijiang, another lovely and underdeveloped area.  You can get to either place by long distance bus, or just rent a car for the day.  Their home brew "sulima" is delicious!

Lugu Lake has a number of interesting ethnic groups in addition to the much discussed Muoso (the matriarchal "walking marriage" group).  There are a lot of Yi, Pumi, Tibetan and a few others such as Naxi and Han.  Most people aren't even aware that the Pumi have their own writing in addition to their own language.  There are quite a few Pumi serving as tour guides to Lugu Lake, and they are a personable, passionate and hospitable group of people, fun to be with.  Their home cured pork is divine, better than any other pork in Lijiang.  A lot of Pumi used to show up at Highland Gale every night when the manager there was a Pumi.  Now they still show up but not every night.  The place rocks when they roll in.  They are very affectionate, and will weep buckets when seeing off a friend.  If you see a pack of them in tears you can guess what's happening.

The Firebrand Festival, usually in August, is the biggest festival of the year for the Yi.  There are a couple of Yi travel agencies in town and they are the best way to get to know the Yi personally is to hire one of them to show you around and then ask endless questions about the guide's own life.  They aren't shy about talking about themselves if they think you are really interested.  The Yi maintain great respect for their elders and you may be surprised at how gracious and loyal these simple farming folk can be.

Much is written about the Naxi of Lijiang, but by all means get to know the far more interesting Naxi in Tacheng, Shitoucheng or other outlying areas.   You'll discover that the native Naxi attributes are all the sweeter when untouched by city life (yes, in these parts, Lijiang as "the city" and like all cities, wipes out some of the local people's native charm).  It's not hard to meet Naxi people from the outlying towns and villages while in Lijiang city, and this is likely to lead to a delightful visit to some place not on the tourist map.  More of the real thing, more of the real setting, and not made for tourists.  Many of the local Dongbas come from the Tacheng area.

Bai people live in Dali and Heqing, and come in droves to Lijiang to work in shops or sell jewelry in stalls or just out of baskets on the street.  Very personable hard working people, honest and loyal when you get to know them.