Conventional cancer treatments include surgery, chemotherapy, and radiation therapy. In recent years, immunotherapy in cancer care has been gaining momentum. Interestingly, an immunotherapeutic regime that employs polysaccharopeptide (PSP), a unique peptide-containing polysaccharide isolated from Coriolus versicolor, has already become a routine clinical practice in Japan since 1977 and in China since 1987. Coriolus versicolor is one of the most well-known traditional food and medicinal mushrooms in China for thousands of years. Medically used PSP is mostly obtained from the extraction of cultured Coriolus versicolor mycelia where β-glucan is the major component. PSP has proven beneficial to survival and quality of life not only for cancer patients but also for patients with hepatitis, hyperlipidemia, and other chronic diseases. In this article, the results of PSP-related preclinical and clinical studies conducted in China from over 40 independent studies during the past 40 years based on searching the Chinese VIP, CNKI, and Wanfang databases are presented. Its immunomodulatory and anti-tumor molecular mechanisms are also summarized. PSP activates immune cells, increases the expressions of cytokines and chemokines such as tumor necrosis factor-α (TNF-α), interleukins (IL-1β and IL-6), histamine, and prostaglandin E, enhances dendritic and T-cell infiltration into tumors, and ameliorates the adverse events associated with chemotherapy. The clinical studies support PSP being a potential immunotherapeutic. However, the complicated chemical and multiple pharmacological properties of PSP need to be investigated further.