Chinese medicine (CM) in inhalation therapy has a long history of applications since ancient China in the forms of smoke, steam vapor, medicated pillows and aromatic sachets. Over the years, thousands of clinical treatments involving the inhalation of CMs have been reported for the treatment of respiratory disease. Shuanghuanglian, Yuxingcao and Qingkailing are primarily applied in pneumonia and bronchitis. At present, metered dose inhalation (MDI), aromatic inhalation and nebulized inhalation are used extensively in practice. In particular, nebulized CM for the treatment of respiratory diseases has been applied as a noninvasive route with reduced serious adverse reactions and is equivalent to or more efficacious than its intravenous counterparts. Although nebulized CM is widely used in clinical practice, only three MDI and five aromatic inhalations of CM products have been approved by the China Food and Drug Administration (CFDA), and no products in the form of a dry powder inhaler (DPI) or in dosage forms intended for nebulization have been reported. The development of formulations for CM has focused on improving the aerodynamic performance of the particles prepared by spray drying, enhancing the bioavailability and local concentration in the respiratory tract, and increasing the mucoadhesion and sustained release of the CM upon the incorporation of novel excipients. New devices, including MDI and nebulizer devices, have been developed for the delivery of the above-mentioned particles to the pulmonary system. Although the development of CM inhalation products to meet the international quality standards is facing a number of challenges, the inhalation of CMs show great potential for further exploration, particularly as an alternative route to IV infusion for the treatment of respiratory diseases.