Traditional Chinese medicine (TCM) is a valuable resource unique to China with a long history of human use and clinical practice, which can be analyzed to generate real-world evidence (RWE). The Chinese government has been actively promoting regulatory reform that is in line with the characteristics of TCM, optimizing the clinical evidence system for TCM, and exploring the important role of RWE in supporting the development of new drugs and regulatory decision-making for TCM. This article aims to provide a comprehensive review of the use of RWE in regulatory decisions for TCM. Based on the characteristics of TCM, this study focuses on the application scenarios, challenges, and opportunities of RWE in TCM. And some suggestions are put forward to promote the wider application of RWE in TCM development and supervision.