Type 2 diabetes mellitus (T2DM), a common and frequently occurring disease in contemporary society, has become a global health threat. However, current mainstream methods of prevention and treatment, mainly including oral hypoglycemic drugs and insulin injections, do not fundamentally block the progression of T2DM. Therefore, it is imperative to find new ways to prevent and treat diabetes. Traditional Chinese medicine is characterized by multiple components, pathways, and targets with mild and long-lasting effects. Pharmacological studies have shown that nourishing yin traditional Chinese medicine (NYTCM) can play a positive role in the treatment of T2DM by regulating pathways such as the phosphatidylinositol 3-kinase/serine-threonine kinase, mitogen-activated protein kinase, nuclear factor-kappa B, and other pathways to stimulate insulin secretion, protect and repair pancreatic β cells, alleviate insulin resistance, ameliorate disordered glucose and lipid metabolism, mitigate oxidative stress, inhibit inflammatory responses, and regulate the intestinal flora. The pharmacologic activity, mechanisms, safety, and toxicity of NYTCM in the treatment of T2DM are also reviewed in this manuscript.