Traditional biotechnology has been utilized by human civilization for long in wide aspects of our daily life, such as wine and vinegar production, which can generate new phytochemicals from natural products using micro-organism. Today, with advanced biotechnology, diverse applications and advantages have been exhibited not only in bringing benefits to increase the diversity and composition of herbal phytochemicals, but also helping to elucidate the treatment mechanism and accelerate new drug discovery from Chinese herbal medicine (CHM). Applications on phytochemical biotechnologies and microbial biotechnologies have been promoted to enhance phytochemical diversity. Cell labeling and imaging technology and −omics technology have been utilized to elucidate CHM treatment mechanism. Application of computational methods, such as chemoinformatics and bioinformatics provide new insights on direct target of CHM. Overall, these technologies provide efficient ways to overcome the bottleneck of CHM, such as helping to increase the phytochemical diversity, match their molecular targets and elucidate the treatment mechanism. Potentially, new oriented herbal phytochemicals and their corresponding drug targets can be identified. In perspective, tighter integration of multi-disciplinary biotechnology and computational technology will be the cornerstone to accelerate new arena formation, advancement and revolution in the fields of CHM and world pharmaceutical industry.