Language contact is often accompanied by lexical borrowing. Lexical borrowing is by no means a mere linguistic phenomenon; it carries profound social and cultural significance. Through long-term interaction with Chinese, the Liangshan Yi language has borrowed a large number of Chinese words, thereby enriching its own vocabulary system and facilitating association, exchange and integration among ethnic groups. From the theoretical perspective of language contact and based on detailed and authentic linguistic data, this paper conducts an in-depth analysis of the cultural functions of modern Chinese loanwords in the Liangshan Yi language and their profound impacts at the material, institutional, and ideological levels from three dimensions: cultural adaptation, cultural identity, and cultural interaction. It argues that modern Chinese loanwords can promote linguistic and cultural exchanges between Yi and Chinese, enrich the expressive capacity of the Yi language. This study bears theoretical and practical significance for advancing Chinese-style modernization in Liangshan Yi-inhabited areas and the building of a culturally strong country, as well as forging a strong sense of community for the Chinese nation.