The physiological and transcriptome analysis revealed that auxin was a positive regulator of lateral root development and tanshinone accumulation in Salvia miltiorrhiza. Roots of S. miltiorrhiza are widely used as medicinal materials in China, and the root morphology and content of bioactive compounds [such as phenolic acids and diterpenoid quinones (tanshinones)] are the main factors to determine the quality of this herb. Auxin regulates root development and secondary metabolism in many plant species, but little is known about its function in S. miltiorrhiza. In this study, S. miltiorrhiza seedlings were treated (exogenous application) with the auxin indole-3-acetic acid (IAA) and the polar auxin transport inhibitor N-1-naphthylphthalamic acid (NPA) to investigate the regulatory roles of auxin in S. miltiorrhiza. The results indicated that exogenous IAA promoted both lateral root development and tanshinones biosynthesis in S. miltiorrhiza. The NPA application suppressed the lateral root development but showed no obvious effects on tanshinones accumulation. Based on the RNA-seq analysis, expressions of genes related to auxin biosynthesis and signaling transduction were altered in both treated groups. Coincidental with the enhanced content of tanshinones, transcripts of several key enzyme genes in the tanshinones biosynthetic pathway were stimulated after the exogenous IAA application. The expression profiles of seven common transcription factor domain-containing gene families were analyzed, and the results implied that some AP2/ERF genes were probably responsible for the auxin-induced lateral root development in S. miltiorrhiza. These findings shed new light on the regulatory roles of auxin on root development and bioactive compounds biosynthesis in S. miltiorrhiza, and lay the groundwork for future research into the detailed molecular mechanism underlying these biological functions.