This review focuses on the efficacy and safety of Chinese medicine in the treatment of type-2 diabetes. Included were 84 controlled clinical studies of type-2 diabetes treated with Chinese medicine for at least 1 month. Reported outcomes were: symptom relief; improvement in glycemia, insulin resistance and secondary failure, and adverse events. Symptom relief was achieved in most (>80%) of the patients receiving Chinese medicine. Compared with orthodox drugs, Chinese medicine had a 1.2-fold (95% CI 1.2-1.3) increase in symptom relief. The relative risk of achieving a fasting blood glucose of <7.3 mmol/l or a postprandial blood glucose of <8.2 mmol/l was: 3.0 (95% CI 1.4-6.5) for Chinese medicine plus diet versus diet; 2.0 (95% CI 1.4-3.0) for Chinese medicine versus placebo; 1.8 (95% CI 1.4-2.3) for combined Chinese medicine and orthodox drugs versus Yuquan Wan (a classic Chinese herbal formula for diabetes), 1.5 (95% CI 1.4-1.7) for combined Chinese medicine and orthodox drugs vs. orthodox drugs, and 1.3 (95% CI 1.2-1.5) for Chinese medicine versus orthodox drugs. A fasting blood glucose of <8.2 mmol/l plus symptom relief was observed in 71-100% of the patients with secondary failure to oral anti-diabetic drugs. Serious adverse events including hypoglycemic coma and death were caused by adulteration with orthodox drugs, erroneous substitution, self-meditation, overdoses, and improper preparation. Chinese herbal medicine should be used cautiously with doctors' prescription and follow-up. Long-term clinical studies may disclose the effectiveness of Chinese medicine in reducing the mortality and morbidity of diabetic complications.