The objectives here are to provide a systematic review of the current evidence concerning the use of Chinese herbs in the treatment of Alzheimer's disease (AD) and to understand their mechanisms of action with respect to the pathophysiology of the disease. AD, characterized microscopically by deposition of amyloid plaques and formation of neurofibrillary tangles in the brain, has become the most common cause of senile dementia. The limitations of western medications have led us to explore herbal medicine. In particular, many Chinese herbs have demonstrated some interesting therapeutic properties. The following databases were searched from their inception: MEDLINE (PUBMED), ALT HEALTH WATCH (EBSCO), CINAH and Cochrane Central. Only single Chinese herbs are included. Two reviewers independently extracted the data and performed quality assessment. The quality assessment of a clinical trial is based on the Jadad criteria. Seven Chinese herbs and six randomized controlled clinical trials were identified under the predefined criteria. Ginkgo biloba, Huperzine A (Lycopodium serratum) and Ginseng have been assessed for their clinical efficacy with limited favorable evidence. No serious adverse events were reported. Chinese herbs show promise in the treatment of AD in terms of their cognitive benefits and more importantly, their mechanisms of action that deal with the fundamental pathophysiology of the disease. However, the current evidence in support of their use is inconclusive or inadequate. Future research should place emphasis on herbs that can treat the root of the disease.