This paper tried to analyse the innovation of Chinese medical health food sector in China from 1980s by using the system of sectorial innovation. The paper contextualises the different factors which affect the development of the sector of Chinese medicine health food. In conclusion, the paper indicates the Chinese policy and law publishing, which in order to regulate the Chinese medical health food industries, are the most important elements that impact the Chinese medical health food sector from past to present, compared with the other factors such as demand, action of the actor and technology innovation. On the other hand, some hypotheses are described about the future development and problem about the Chinese medicine health sector in the paper.