Traditional fermented soybean food has emerged as an important part of people's dietary structure because of the unique flavors and improved health benefit. During fermentation, the nutrients in soybean undergo a series of biochemical reactions catalyzed naturally by microorganism secreted enzymes. Thereafter, many functional and bioactive substances such as bioactive peptides, unsaturated fatty acids, free soy isoflavones, vitamins and minerals are produced, making fermented soy products more advantageous in nutrition and health. This review comprehensively discusses the historical evolution, distribution, traditional fermentation processing, main sources and characteristics of fermented strains, flavor components, nutritional properties, and biological activities of four traditional fermented soybean foods including douchi, sufu, dajiang, and soy sauce. In the end, we introduce four major challenges encountered by traditional fermented soybean foods including high salt content, formation of biogenic amine, the presence of pathogenic microorganisms and mycotoxins, and quality inconsistency. We conclude that the establishment of scientific quality standard and innovated fermentation processing is the potential solutions to combat the issues and improve the safety of traditional fermented soybean products.