It is currently only in a single spring in the drainage basin of Lake Dianchi in Yunnan.

Yunnanilus discoloris is so named because of the sexual dimorphism this species shows.

The males have a black longitudinal stripe on both flanks with a light blackish stripe of spots along its back while the female shows black spotting and blotching on both the back and the flanks.

The water in the spring, which lies at 1,886m above sea level, is clear with a bed consisting of sand with some stones and with a plant community made up of Ceratophyllum demersum, Spirogyra spp.

The spring is not protected and the IUCN assess the status of this species as Critically Endangered.