Strongly correlated Fermi system plays a fundamental role in very different areas of physics, from neutron stars, quark-gluon plasmas, to high temperature superconductors. Despite the broad applicability, it is notoriously difficult to be understood theoretically because of the absence of a small interaction parameter. Recent achievements of ultracold trapped Fermi atoms near a Feshbach resonance have ushered in enormous changes. The unprecedented control of interaction, geometry and purity in these novel systems has led to many exciting experimental results, which are to be urgently understood at both low and finite temperatures. Here we review the latest developments of virial expansion for a strongly correlated Fermi gas and their applications on ultracold trapped Fermi atoms. We show remarkable, quantitative agreements between virial predictions and various recent experimental measurements at about the Fermi degenerate temperature. For equation of state, we discuss a practical way of determining high-order virial coefficients and use it to calculate accurately the long-sought third-order virial coefficient, which is now verified firmly in experiments at ENS and MIT. We discuss also virial expansion of a new many-body paramter -Tan's contact. We then turn to less widely discussed issues of dynamical properties. For dynamic structure factor, the virial prediction agrees well with the measurement at the Swinburne University of Technology. For single-particle spectral function, we show that the expansion up to the second order accounts for the main feature of momentum-resolved rf-spectroscopy for a resonantly interacting Fermi gas, as recently reported by JILA. In the near future, more practical applications with virial expansion are possible, owing to the ever-growing power in computation.