Background: You Gu Wu Yun, a Chinese ancient medicine application principle, has played an important role in Traditional Chinese Medicine (TCM) clinical practice so far. Materials and Methods: It emphasized that disease, medicine and treatment method were interconnecting and the relationship among these three aspects should be handled reasonably. The major factors (including organism status, medicine source, medicine processing, compatibility of medicines, dose and course, dosage form) under the three aspects which have a more important and direct influence on the medicine clinical effect should be considered seriously in the TCM application. Results: However, it was analyzed that most of side effects of TCM may be due to the incorrect application, which violated this principle to a certain degree. In order to help people to understand the safety and toxicity of TCM objectively and provide a rational guidance for the safe and effective application of TCM, we will introduce the concept of You Gu Wu Yun and discuss these factors having influence on medicine in this review. An example will be shown in order to clarify how these factors work in medicine. Conclusions: As a unique medical system, TCM has its own theoretical basis and treatment principle. It stresses syndrome differentiation, namely personalized medicine. Therefore, it is critical to handle the relationship among disease, medicine and treatment for safe and effective medicine application.