Traditional Chinese medicine (TCM) encompasses treatment strategies for diabetes, which is referred to as "Consumptive Thirsty" syndrome. Recently, there has been discovery regarding the mapping between TCM and signaling molecules, which has revealed a remarkable consistency between TCM and modern medicine from a molecular perspective. In this manuscript, we have summarized the etiology and treatment strategies for diabetes in TCM and have examined these strategies in the context of molecular mechanisms. Our review demonstrates that the targeting molecule of TCM for the treatment of diabetes is FoxO1, a transcription factor that plays a pivotal role in regulating gluconeogenesis and glycogenolysis. TCM ranks the development of diabetes into three stages and utilizes different herbal formulas to control FoxO1 accordingly. At Stage 1, TCM inhibits FoxO1 by lowering its expression in the lung. At Stage 2, TCM increases the expression of FoxO1 by suppressing its activity in the stomach. At Stage 3, TCM utilizes the famous herbal formula Liuwei Dihuang Pill to amplify the expression of FoxO1, and to enhance the concentrations of potassium, phosphorus, and Wnt, but to reduce the concentration of calcium. These TCM treatment strategies are in accordance with corresponding mechanisms in modern medicine.