Honey is a natural food item produced by honey bees. Ancient civilizations considered honey as a God gifted prestigious product. Therefore, a huge literature is available regarding honey importance in almost all religions. Physically, honey is a viscous and jelly material having no specific color. Chemically, honey is a complex blend of many organic and inorganic compounds such as sugars, proteins, organic acids, pigments, minerals, and many other elements. Honey use as a therapeutic agent is as old as human civilization itself. Prior to the appearance of present day drugs, honey was conventionally used for treating many diseases. At this instant, the modern research has proven the medicinal importance of honey. It has broad spectrum anti-biotic, anti-viral and anti-fungal activities. Honey prevents and kills microbes through different mechanism such as elevated pH and enzyme activities. Till now, no synthetic compound that works as anti-bacterial, anti-viral and anti-fungal drugs has been reported in honey yet it works against bacteria, viruses and fungi while no anti-protozoal activity has been reported. Potent anti-oxidant, anti-inflammatory and anti-cancerous activities of honey have been reported. Honey is not only significant as anti-inflammatory drug that relieve inflammation but also protect liver by degenerative effects of synthetic anti-inflammatory drugs. This article reviews physico-chemical properties, traditional use of honey as medicine and mechanism of action of honey in the light of modern scientific medicinal knowledge.