Functional diarrhea is a common disease of the lower digestive tract, and its pathogenesis is still unclear. Western medicine mainly treats symptoms, therefore Traditional Chinese Medicine (TCM) has obvious advantages over western medicine. In this paper, we comprehensively discuss the present progress in research of TCM treatment of functional diarrhea, including pathogenesis of functional diarrhea, western medicine treatment, curative effect of TCM treatment, pharmacology, and mechanism.