Chronic gastritis (CG) is a common clinical digestive system disease, which is not easyily cured and is prone to recurrence. Traditional Chinese medicine (TCM) plays a significant role in the treatment of CG and has attracted increasing attention for clinical applications. In recent years, a large number of reports have shown that TCM has good therapeutic effect on CG. The aim of this paper is to investigate the pharmacological activities and mechanism of action of TCM in the treatment of CAG. Therefore, by searching the databases of Pubmed, China National Knowledge Infrastructure, Wanfang, and Baidu academic databases, this paper has summarized the molecular mechanisms of TCM in improving CG. The results show that the improvement of GC by TCM is closely related to a variety of molecular mechanisms, including the inhibition of Helicobacter pylori (Hp) infection, alleviation of oxidative stress, improvement of gastric function, repair of gastric mucosa, inhibition of inflammatory response, and apoptosis. More importantly, IRF8-IFN-γ, IL-4-STAT6, Hedgehog, pERK1/2, MAPK, PI3K-Akt, NF-κB, TNFR-c-Src-ERK1/2-c-Fos, Nrf2/HO-1, and HIF-1α/VEGF signaling pathways are considered as important molecular targets for TCM in the treatment of GC. These important findings will provide a direction and a basis for further exploring the pathogenesis of GC and tapping the potential of TCM in clinical treatment. This review also puts forward a bright prospect for future research of TCM in the treatment of CG.