The prevalence and comorbidity of psychiatric disorders such as depression, anxiety and insomnia are very common. These well-known forms of psychiatric disorders have been affecting many people from all around the world. Herb alone, as well as herbal formula, is commonly prescribed for the therapies of mental illnesses. Since various adverse events of western medication exist, the number of people who use herbs to benefit their health is increasing. Over the past decades, the exploration in the area of herbal psychopharmacology has received much attention. Literatures showed a variety of herbal mechanisms of action used for the therapy of depression, anxiety and insomnia, involving reuptake of monoamines, affecting neuroreceptor binding and channel transporter activity, modulating neuronal communication or hypothalamic-pituitary adrenal axis (HPA) etc. Nonetheless, a systematic review on herbal pharmacology in depression, anxiety and insomnia is still lacking. This review has been performed to further identify modes of action of different herbal medicine, and thus provides useful information for the application of herbal medicine.