Background: Former socialist countries have undergone a socio-economic transition in recent decades. New challenges for the healthcare system have arisen in the transition economy, leading to demands for better management and development of the health professions. However, few studies have explored the effects of this transition on health professions education. Thus, we investigated the effects of the socio-economic transition on the health professions education system in Mongolia, a transition economy country, and to identify changes in requirements. Methods: We used a multi-level perspective to explore the effects of the transition, including the input, process, and output levels of the health professions education system. The input level refers to planning and management, the process level refers to the actual delivery of educational services, and the output level refers to issues related to the health professionals, produced by the system. This study utilized a qualitative research design, including document review and interviews with local representatives. Content analysis and the constant comparative method were used for data analysis. Results: We explored tensions in the three levels of the health professions education system. First, medical schools attained academic authority for planning and management without proper regulation and financial support. The government sets tuition fees, which are the only financial resource of medical schools; thus, medical schools attempt to enroll more students in order to adapt to the market environment. Second, the quality of educational services varies across institutions due to the absence of a core curriculum and differences in the learning environment. After the transition, the number of private medical schools rapidly increased without quality control, while hospitals started their own specialized training programs. Third, health professionals are struggling to maintain their professional values and development in the market environment. Fixed salaries lead to a lack of motivation, and quality evaluation measures more likely reflect government control than quality improvement.Conclusion: Mongolia continues to face the consequences of the socio-economic transition. Medical schools’ lack of financial authority, the varying quality of educational services, and poor professional development are the major adverse effects. Finding external financial support, developing a core curriculum, and introducing performance-based payments are recommended.