Traditional Chinese Medicine (TCM) has been used to treat diseases in China for thousands of years. TCM compositions are complex, using as their various sources plants, animals, fungi, and minerals. Polysaccharides are one of the active and important ingredients of TCMs. Polysaccharides from TCMs exhibit a wide range of biological activities in terms of immunity- modifying, antiviral, anti-inflammatory, anti-oxidative, and anti-tumor properties. With their widespread biological activities, polysaccharides consistently attract scientist's interests, and the studies often concentrate on the extraction, purification, and biological activity of TCM polysaccharides. Currently, numerous studies have shown that the modification of polysaccharides can heighten or change the biological activities, which is a new angle of polysaccharide research. This review highlights the current knowledge of TCM polysaccharides, including their extraction, purification, modification, and biological activity, which will hopefully provide profound insights facilitating further research and development.