To evaluate the effect of Chinese herbal medicine (CHM) on albuminuria levels in patients with diabetic nephropathy (DN), we performed comprehensive searches on Medline database, Cochrane Library, CNKI database, CBM database, Wanfang database, and VIP database up to December 2012. A total of 29 trials including 2440 participants with DN met the selection criteria. CHM was tested to be more effective in reducing urinary albumin excretion rate (UAER) (MD −82.95 μg/min, [−138.64, −27.26]) and proteinuria (MD −565.99 mg/24 h, [−892.41, −239.57]) compared with placebo. CHM had a greater beneficial effect on reduction of UAER (MD −13.41 μg/min, [−20.63, −6.19]) and proteinuria (MD −87.48 mg/24 h, [−142.90, −32.06]) compared with angiotensin converting enzyme inhibitors (ACEI) or angiotensin receptor blockers (ARB). Combination therapy with CHM and ACEI/ARB showed significant improvement in UAER (MD −28.18 μg/min, [−44.4, −11.97]), urinary albumin-creatinine ratio (MD −347.00, [−410.61, −283.39]), protein-creatinine ratio (MD −2.49, [−4.02, −0.96]), and proteinuria (MD −26.60 mg/24 h, [−26.73, −26.47]) compared with ACEI/ARB alone. No serious adverse events were reported. CHM seems to be an effective and safe therapy option to treat proteinuric patients with DN, suggesting that further study of CHM in the treatment of DN is warranted in rigorously designed, multicentre, large-scale trials with higher quality worldwide.