Japanese traditional herbal medicine (Kampo) has its origins in traditional Chinese medicine (TCM). It was introduced to Japan in the middle of the sixth century and has evolved over the past 1,400 years after combining with Japan’s original folk remedies. While it retains some similarities to TCM, Kampo has evolved in Japan, resulting in a system of medicine that has many differences from TCM. Kampo medicine is considered to be very safe; in Japan, Kampo herbal formulas are manufactured by licensed pharmaceutical companies, prescribed by Western-trained medical doctors (usually as a freeze-dried extract), and have quality control standards similar to those of prescription drugs. The present study examined Yokukan-san (Yi-Gan San in TCM), a Kampo formula that has been used empirically in Japan for more than 400 years. Accumulating clinical trials have demonstrated Yokukan-san’s efficacy in treating patients with behavioral and psychological symptoms of dementia, which has resulted in the Japanese Society of Neurology listing it in the Japanese Guidelines for the Management of Dementia 2010. Efficacy in other diseases and conditions, such as sleep disorders, tardive dyskinesia, aggression, and impulsivity has also been reported. This article reviews both clinical and basic studies of Yokukan-san, with the goal of clarifying its clinical indications.