This review examines the historical development, ethnopharmacology, traditional applications, phytochemistry, and pharmacological attributes of Atractylodis Rhizoma (AR). Data were collected from a range of electronic databases, academic libraries, and classical literature. In China, AR is highly valued for its medicinal properties. Research has identified 327 compounds, including sesquiterpenes, triterpenes, flavonoids, and phenolics, which contribute to its diverse pharmacological activities, such as antimicrobial, anti-inflammatory, antioxidant, hepatoprotective, and neuroprotective effects. AR is particularly effective in treating modern gastrointestinal disorders and influenza. As a traditional herb with a rich historical background, AR exhibits significant therapeutic potential. This review aims to correlate its active components with its primary therapeutic effects and highlight existing research gaps. Current studies primarily focus on extraction methods and pharmacodynamics. Future research should employ multi-omics and molecular biology techniques to further elucidate active components and their targets, while also addressing the challenge of low bioavailability.