Guizhi Decoction was one of the most commonly used traditional Chinese Medicine which possesses the effects of "jie-ji-fa-biao, regulating Ying and Wei". It was mainly used to treat mind-cold due to exogenous evils such as fever, headache, sweating, hate the wind, et al. Modern studies indicated that the chemical constituents of Guizhi decoction mainly include phenylpropanoid, monoterpenes, organic acids, flavonoids, triterpenoid saponins and so on. Pharmacological experimental studies had shown that Guizhi decoction could play a big role in dual-directional regulation on sweat gland, body temperature, immune function, gastrointestinal peristalsis, and blood pressure, and could also play the role of anti-inflammatory, antibacterial, antiviral, anti-allergic, analgesic, hypoglycemic, and cardiovascular protection. Many diseases such as internal, external, gynecological and pediatric diseases were treated in the clinical by using Guizhi decoction and its analogous formulae involving circulatory, immune, urinary, reproductive, endocrine, digestive, nervous and other systems. This article reviews the latest research progress of Guizhi decoction from three aspects: chemical constituents, pharmacological mechanism and clinical application. It will provide reference for further research and development of Guizhi decoction.