Lithospermum erythrorhizon, commonly known as gromwell, is a valuable medicinal plant with a wide range of pharmacological activities. Its roots are rich in bioactive compounds such as phenolic acids, flavonoids, naphthoquinones, alkaloids, and other phytochemicals. Among these, shikonin, a naphthoquinone, stands out due to its remarkable pharmacological properties, including anti‐inflammatory, antimicrobial, and anticancer activities. This review provides an overview of the plant's morphology, distribution, ethnomedical applications, and phytochemistry, with a particular focus on shikonin. Online databases like PubMed, Google Scholar, Web of Science, and Scopus were used to gather information using keywords such as Lithospermum erythrorhizon, shikonin, phytochemistry, and pharmacological activities. Findings highlight that shikonin demonstrates significant pharmacodynamic effects, particularly in cancer therapy. However, its hydrophobic nature limits its bioavailability. To address this, encapsulating shikonin in advanced drug delivery systems, such as micelles, can enhance its solubility, stability, and therapeutic efficacy. This review underscores the potential of shikonin as a novel drug for treating various diseases, especially cancer, and emphasizes the importance of innovative delivery strategies to maximize its clinical applications.