In traditional Chinese medicine (TCM), based on various pathogenic symptoms and the ‘golden chamber’ medical text, Huangdi Neijing, diabetes mellitus falls under the category ‘collateral disease’. TCM, with its wealth of experience, has been treating diabetes for over two millennia. Different antidiabetic Chinese herbal medicines reduce blood sugar, with their effective ingredients exerting unique advantages. As well as a glucose lowering effect, TCM also regulates bodily functions to prevent diabetes associated complications, with reduced side effects compared to western synthetic drugs. Chinese herbal medicine is usually composed of polysaccharides, saponins, alkaloids, flavonoids, and terpenoids. These active ingredients reduce blood sugar via various mechanism of actions that include boosting endogenous insulin secretion, enhancing insulin sensitivity and adjusting key enzyme activity and scavenging free radicals. These actions regulate glycolipid metabolism in the body, eventually achieving the goal of normalizing blood glucose. Using different animal models, a number of molecular markers are available for the detection of diabetes induction and the molecular pathology of the disease is becoming clearer. Nonetheless, there is a dearth of scientific data about the pharmacology, dose‐effect relationship, and structure–activity relationship of TCM and its constituents. Further research into the efficacy, toxicity and mode of action of TCM, using different metabolic and molecular markers, is key to developing novel TCM antidiabetic formulations.