Isobavachalcone (IBC), also known as isobapsoralcone, is a natural flavonoid widely derived from many medicinal plants, including Fabaceae, Moraceae, and so forth. IBC has been paid more and more attention by researchers in recent years due to its pharmacological activity in many diseases. This review aims to describe in detail the plant sources, pharmacokinetics, toxicity, pharmacological activities, and molecular mechanisms of IBC on various diseases. We found that IBC can be obtained not only by extraction but also by chemical synthesis. Pharmacokinetic studies have shown that IBC has low bioavailability, but can penetrate the blood–brain barrier and is widely distributed in the brain. Its pharmacological activities mainly include anticancer, antibacterial, anti‐inflammatory, antiviral, neuroprotective, bone protection, and other activities. In particular, IBC shows strong anti‐tumor and anti‐inflammatory therapeutic potential due to its anti‐cancer and anti‐inflammatory activities. However, due to its hepatotoxicity, there may be more drug interactions. Therefore, more and more in‐depth studies are needed for its clinical application. Mechanically, IBC can induce the production of reactive oxygen species (ROS), inhibit AKT, ERK, and Wnt pathways, and promote apoptosis of cancer cells through mitochondrial or endoplasmic reticulum pathways. IBC can inhibit the NF‐κB pathway and the production of multiple inflammatory mediators by activating NRF2/HO‐1 pathway, thus producing anti‐inflammatory effects. Moreover, we discussed the limitations of current research on IBC and put forward some new perspectives and challenges, which provide a strong basis for clinical application and new drug development of IBC in the future.