Abstract: The external use of traditional Chinese medicine (TCM) has a profound history and remarkable advantages. However, its development is limited in recent years. The present article overviewed the history of external preparations of TCM and discussed the status of the formulations which have been utilized in both of TCM and modern pharmaceutics. Based on such foundation, the key issues, and potential solutions for external preparations of TCM are raised, while future direction in investigating external preparations in TCM are also discussed. External preparations are believed to be one of the three major formulations in future development of TCM pharmaceutics compared to oral administration and injection. Three unresolved questions in external preparations of TCM are known to be unclear chemical fundamentals, poor absorption efficiency and delayed wound healing. These issues are expected to be investigated via using biomimetic membrane separation technology, TCM essential oil and skin microbiome. In the future, TCM external preparations will have a broad prospect in many fields, such as novel biomaterials, innovative technology application, new formulation techniques and microbiome, which will lead to further development in external formulation of TCM.