In China, the area used to grow Chinese herbal medicinal plants continues to expand, reaching 90 million mu in 2021, with an output of 4.952 million tonnes. At present, the selection and breeding of these medicinal plants is mainly based on conventional breeding, resulting in relatively few elite varieties, with most little more than cultivated wild plants. Research into selection and breeding of high-quality, disease-resistant, stress-resistant, and storage-resistant varieties has been limited, making it difficult to meet the needs of large-scale, modernised agriculture and Chinese medicine. The germplasm purification, cross-breeding, and bio-breeding of Chinese herbal medicinal plants is very limited, and requires the improved selection and rational grouping of a core breeding germplasm. To promote and accelerate the cultivation of these medicinal plants, as well as to more broadly develop the seed industry, there is an urgent need to strengthen germplasm innovation in Chinese herbal medicinal plants, particularly for medicinal characteristics. Identifying and collecting germplasm resources is foundational work with societal benefits. The rational use of foreign varieties, local varieties, or wild relatives will play an important role in germplasm amplification, improvement, and innovation. The development of genomics technologies has promoted the use of Chinese herbal medicinal germplasm resources and the discovery of trait-associated genes, and has improved breeding efficiency by facilitating the targeted breeding of new varieties. This paper systematically discusses the current situation and challenges faced when cultivating Chinese herbal medicinal plants, their germplasm innovation, the key genomic technologies involved, and the strategies for constructing the basic platform to achieve these innovations. Chinese herbal medicinal plants have a high degree of heterozygosity, which poses breeding challenges that differ from those of major crops. The breeding objectives should consider both the yield and quality of the new varieties. Looking forward, we propose that germplasm innovation and the breeding of new varieties with "internal homeostasis" is one of the major tasks in the near future. The Chinese herbal medicinal germplasm resource management system includes four functional modules according to the breeding needs, providing germplasm resource and variety data retrieval query and comparison for open data, and convenient tools for the screening of breeding materials. This system supports the selection of materials involved in the breeding process, the management of information on field trials and the information on selection and breeding experiments. It also supports the management of the information on the material selection, field trial and selection trial, and new variety library management in the breeding process; establishing a resource collection task on the PC and collecting germplasm information through mobile phone programme. This system will become a bridge between germplasm resources and breeding research, and can be used for directional cultivation of parents and their varieties. With this review, we aim to provide theoretical and technological guidance for selecting and breeding Chinese herbal medicinal plants, which will promote further development of the high-quality medicinal plant seed industry.