Honokiol (HK) is a traditional Chinese herbal bioactive compound that originates mainly from the Magnoliaspecies, traditionally used to treat anxiety and stroke, as well as alleviation of flu symptoms. This natural product and its derivatives displayed diverse biological activities, including anticancer, antioxidant, anti‐inflammatory, neuroprotective, and antimicrobial activities. However, its poor bioavailability and pharmacological activity require primary consideration in the development of HK‐based drugs. Recent innovative HK formulations based on the nanotechnology approach allowed for improvement in both bioavailability and therapeutic efficacy. Chemical derivation and drug combination are also effective strategies to ameliorate the drawbacks of HK. In recent years, studies on HK derivatives and compositions have made great progress in the treatment of cancer, inflammation, antibacterial, cardiovascular, and cerebrovascular diseases, demonstrating better activity than HK. The objective of this review is an examination of the recent developments in the field of pharmacological activity of HK and its drug‐related issues, and approaches to improve its physicochemical and biological properties, including solubility, stability, and bioavailability. Recent patents and the ongoing clinical trials in HK are also summarized.