Yerba Mate tea, an infusion made from the leaves of the tree Ilex paraguariensis, is a widely consumed nonalcoholic beverage in South America which is gaining rapid introduction into the world market, either as tea itself or as ingredient in formulated foods or dietary supplements. The indigenous people have used it for centuries as a social and medicinal beverage. Yerba Mate has been shown to be hypocholesterolemic, hepatoprotective, central nervous system stimulant, diuretic, and to benefit the cardiovascular system. It has also been suggested for obesity management. Yerba Mate protects DNA from oxidation and in vitro low-density lipoprotein lipoperoxidation and has a high antioxidant capacity. It has also been reported that Yerba Mate tea is associated to both the prevention and the cause of some types of cancers. Yerba Mate has gained public attention outside of South America, namely the United States and Europe, and research on this tea has been expanding. This review presents the usage, chemistry, biological activities, health effects, and some technological considerations for processing of Yerba Mate tea. Furthermore, it assesses in a concise and comprehensive way the potential of Ilex paraguariensis as a source of biological compounds for the nutraceutical industry.