Abstract: Traditional Chinese Medicine (TCM) offers significant therapeutic potential, yet clinical translation of its bioactive compounds is constrained by poor solubility, low bioavailability, and insufficient targeting. The TCM self-assembly nanostrategy (TSAN) overcomes these limitations by spontaneously organizing active components into functional nanostructures via non-covalent interactions while preserving their intrinsic synergistic effects. This review provides a mechanistic overview of TSAN, emphasizing the cooperative and competitive interplay among hydrogen bonding, π-π stacking, hydrophobic effects, electrostatic forces, and coordination that dictate nanostructure morphology and function. We systematically analyze how molecular architectures of flavonoids, terpenoids, saponins, and alkaloids determine self-assembly behaviors and resultant nanoscale morphologies. Therapeutic applications are comprehensively surveyed across cancer, inflammatory disorders, metabolic diseases, and bacterial infections, highlighting design strategies including carrier-free co-assembly, stimuli-responsive systems, and bio-barrier-penetrating platforms. Finally, we discuss key translational challenges—mechanistic ambiguity, preparation standardization, and insufficient safety data—and outline future directions involving advanced characterization and systematic design approaches. By establishing a comprehensive framework from fundamental interactions to therapeutic applications, this review aims to accelerate rational TSAN development and facilitate the modernization and global integration of TCM.