Aim. The aim is to study the rich traditions that have developed in the art crafts of Dagestan in the formation of the product range in modern conditions. Materials and methods. At the first stage of the study, according to the register and publicly available materials, the constantly changing market of products of folk art crafts was studied as well as its growing influence on the artistic quality of products manufactured by the enterprises of folk arts and crafts. Discussion. To identify the causes that gave rise to this phenomenon, we need to turn to the state of folk art in the late 50's - early 60's of the twentieth century, when almost all the traditional enterprises of the art crafts of the Russian SFSR experienced an acute industrial crisis, which collapsed the unique centers of folk art. As a result of a sharp decline in demand for products of folk handicrafts, the volume of production of enterprises has decreased significantly; skilled hereditary masters with rich experience of making highly artistic works of folk art began to leave the fields. Conclusion. During the research, were revealed the main problems of sustainable development of folk arts and crafts in modern conditions in connection with the changing market conditions.