Traditional Chinese medicine (TCM) treatments are often prescribed based on individuals' pattern diagnoses. A systematic review of Chinese and English literatures on TCM pattern differentiation, treatment principle, and pattern-based treatment for insomnia has therefore been conducted. A total of 227 studies, 17916 subjects, and 87 TCM patterns were analyzed. There was a limited consistency in pattern-based TCM treatment of insomnia across practitioners. Except for Gui Pi Tang, An Shen Ding Zhi Wan, and Wen Dan Tang which were used more commonly for deficiency of both the heart and spleen, internal disturbance of phlegm-heat, and qi deficiency of the heart and gallbladder, respectively, the selection of herbal formula for other patterns and pattern-based prescription of individual herbs and acupoints were not consistent. Suanzaoren (Semen Z. spinosae), Fuling (Poria), Yejiaoteng (Caulis P. multiflori), Gancao (Radix Glycyrrhizae), Baishao (Radix P. alba), Shenmen (HT7), Yintang (EX-HN3), Sanyinjiao (SP6), Baihui (GV20), Anmian (EX-HN22), and Sishencong (EX-HN1) were commonly used, but nonspecifically for many patterns. Treatment principles underlying herb and acupoint selection were seldom reported. Although many studies were reviewed, the study quality and diagnostic process were inadequate. More high quality studies are needed to examine the additional benefits of pattern differentiation and pattern-based TCM treatment.