Objective The Chengdu initiative essential medicine policy is part of the Special Healthcare Program of Comprehensive Reform for Coordinated and Balanced Urban-rural Development. We aimed to investigate the current situation of medicine use in rural hospitals and community health service centers, so as to provide evidence for policy-makers to select essential medicines and facilitate rational use of medicines. Method We selected 7 township/community health institutions from which to collect medicine use information, including medicine category, number of medicine categories, cost and consumption. Descriptive analysis and the ABC classification method were applied for statistical analysis. Results The number of medicine categories used in the community health institutions was four times greater than that in the township health institutions. Traditional Chinese medicine preparations accounted for 40% of the total medicine cost. Polypharmacy, overuse of injections, and improper use of antibiotics were major manifestations of the irrational use of medicines. Conclusion The selection and use of essential medicines should be base on high quality evidence as well disease burden, the economic situation and specific demands in different areas. Drug and therapeutics committees should be set up to perform dynamic monitoring, education, evaluation and continual improvement of an essential medicines list.