Although natural compounds have provided a wealth of leads and clues in drug development, the process of identifying their pharmacological effects is still a challenging task. Over the last decade, many in vitro screening methods have been developed to identify the pharmacological effects of natural compounds, but they are still costly processes with low productivity. Therefore, in silico methods, primarily based on molecular information, have been proposed. However, large-scale analysis is rarely considered, since many natural compounds do not have molecular structure and target protein information. Empirical knowledge of medicinal plants can be used as a key resource to solve the problem, but this information is not fully exploited and is used only as a preliminary tool for selecting plants for specific diseases. Here, we introduce a novel method to identify pharmacological effects of natural compounds from herbal medicine based on phenotype-oriented network analysis. In this study, medicinal plants with similar efficacy were clustered by investigating hierarchical relationships between the known efficacy of plants and 5,021 phenotypes in the phenotypic network. We then discovered significantly enriched natural compounds in each plant cluster and mapped the averaged pharmacological effects of the plant cluster to the natural compounds. This approach allows us to predict unexpected effects of natural compounds that have not been found by molecular analysis. When applied to verified medicinal compounds, our method successfully identified their pharmacological effects with high specificity and sensitivity.