Traditional Chinese medicine (TCM) is highlighted by conservation practitioners as an ongoing threat to many overharvested plant and animal species, including several charismatic threatened vertebrates. However, studies that provide evidence-based and practical recommendations on how to better regulate the TCM trade for sustainability and biodiversity conservation remain limited. China is the biggest promotor of and market for TCM and understanding the TCM trade in China is important for global biodiversity conservation. In particular, conservation researchers need to better understand how the TCM trade and its regulations interact with China's development needs and should collaborate with TCM communities to propose locally adapted suggestions to decision makers. However, progress in these areas has been restricted by language, cultural, and knowledge barriers. In this paper, we provide an overview of the current status of TCM-related regulations in China, identify weaknesses in regulation frameworks, and highlight issues that currently limit our understanding of the magnitude, dynamics, and impact of the trade. We propose changes in trade regulations, actions to enhance law enforcement, and future research directions to encourage a more sustainable TCM trade that benefits both global biodiversity conservation and TCM development.