Yuyuan Market, or Yuyuan Bazaar, is located next to the Yuyuan Garden. Originally there was just a temple (the City God Temple) that built in the 15th Century. Today the area is also home to a lively market that specializes in traditional Chinese arts and crafts. 

Over 100 years ago there was an increase in pilgrims who came to worship at the temple. As a result businesses and peddlers began to open up shops in the immediate area to cater to these pilgrims. Since that time this market has continued to grow in importance. Today you can find more than 100 different shops and restaurants in the immediate area. It is a place where locals and tourists go to find unique items to purchase and grab a bite to eat at one of the many restaurants. 
You can pick some antiques, silk fans, bamboo articles, shell carvings, paintings, or you try some Shanghai Xiao Long Bao (Soup Dumplings), vegetarian buns, chicken soup to experience a little of the Shanghai culture. It is surely pleasing, and you will get back home with great souvenirs. (From Chinatourguide.com)