The description of the “kidney” was entirely different from modern medicine. In traditional Chinese medicine (TCM), the kidney was a functional concept regulating water metabolism, which was closely related to the urinary system, reproductive system, nervous system, endocrine, skeleton, hearing, metabolism, immunity, etc. In particular, the kidney in TCM plays an important regulatory role in the processes of growth, development, prime, aging, and reproduction. Hence, “Kidney Governing Bone” (KGB) was a classical theory in TCM, which hypothesized that the function of the kidney was responsible for bone health. However, the related modern physiological mechanisms of this TCM theory are unclear. This present paper proposed a new understanding and explored the biological basis of the KGB theory. After searching through plenty of reported literature, we discovered that the functions of the kidney in TCM were closely associated with the hypothalamic-pituitary-gonadal (HPG) axis in modern science. The physiological mechanism of the KGB was regulated by sex hormones and their receptors. This review deciphered the connotation of the KGB theory in modern medicine and further verified the scientificity of the basic TCM theory.