Rhizoma Alismatis (RA), the dried rhizome of Alisma orientale (Sam.) Juzep, is a common traditional herbal medicine named Ze Xie in Chinese. RA is an important herbal component of a number of well-known Chinese medicinal preparations. It has been used to treat various ailments, such as dysuria, edema, nephropathy, hyperlipidemia, and diabetes. A wide range of chemical compounds, mainly triterpenoids, sesquiterpenoids, and diterpenoids, have been isolated from RA; among which the protostane-type triterpenoids, termed alisols, have attracted the most attention owing to their unique chemical structures and various biological activities. The extract and active compounds of RA possess a wide spectrum of pharmacological effects (e.g., diuretic, antimetabolic disorder, hepatoprotective, immunomodulatory, antiosteoporotic, anti-inflammatory, antitumor, antibacterial, and antiviral activities). Previous toxicological evaluations indicated that the RA extracts are relatively safe and have no serious side effects within certain dose ranges. This paper reviews the up-to-date information on the ethnomedicinal application, phytochemistry, pharmacology, and toxicology of RA. This information will be useful for a better understanding of the therapeutic potential of RA.