As Chinese people are living a better life, patients affected with type II diabetes gradually increase. This disease is associated with Jiaotai Pill (JTP)’s corresponding syndrome-imbalance between fire and water, which stands as the basis of the theory. This provides a theoretical basis for application of JTP to treat diabetes of the above type. This paper summarized the basis pharmacology studies of JTP in treating diabetes as well as the complicating retinopathy, including hypoglycemic effect, proportion and mechanism, and clinical application. In future research, we should strengthen the study in correspondence between prescription and syndrome, so as to provide theoretical basis of JTP in treating diabetes.