This paper reviewed application of chitin and its derivatives in pharmaceutical industry of traditional Chinese medicine in recent years. Chitin and its derivatives could be used as a clarificant, retaining active substances, stabiliting preparation, reducing the heavy metals of traditional Chinese medicine extraction. Because of their churacteristics in biodegradation, biocompatibility and its tendency to film easily, chitin and its derivatives was ideal assistant materials in traditional Chinese medicine. Its application was largely enhanced after chitosan was modified. The problems and prospects of the application of chitin and its derivatives were also discussed.