Chinese guideline has been proven effective in the fight against Coronavirus disease 2019 (COVID-19) during the epidemic spread globally. Traditional Chinese medicine (TCM) has been widely recognized for its effectiveness in alleviating symptoms, inhibiting disease deterioration, reducing mortality, and improving cure rate of COVID-19 patients. During the pandemic, “three medicines and three formulas” stood out from hundreds of registered clinical studies and became the highly recommended TCM for COVID-19 treatment. The “three medicines and three formulas” not only effectively relieve the clinical symptoms of fever, cough, fatigue, and phlegm, but also significantly shorten the time of nucleic acid negative conversion, improve lung computed tomography imaging feature and inflammation, ameliorate clinical biochemical indicators, and reduce sequelae. The potential pharmacological mechanisms of them are mainly relevant with the crosstalk of viral toxicity, endothelial damage, cytokine storm, immune response, and microthrombus. In brief, the clinical effects as well as the potential mechanisms of “three medicines and three formulas” on COVID-19 were systematically analyzed and summarized covering the whole stages of disease development, including virus invasion and replication, immune response and cytokine storm, and acute respiratory distress syndrome and multiple organ dysfunction syndrome. We hope that this review could provide theoretical basis and reference for in-depth understanding the positive role of “three medicines and three formulas” for COVID-19 treatment.