Atopic dermatitis (AD) is a chronic allergic inflammatory disease. AD is often associated with allergic rhinitis and asthma. In addition, AD is a risk factor for dementia, attention deficit/hyperactivity disorder, and cardiovascular disease. Chinese medicine (CM) physicians usually use oral drugs and external therapies to treat AD. External therapies are safe and effective long-term treatments. Therefore, external therapies exhibit good AD patient compliance. Herein, we aimed to discuss the CM external therapies of AD such as ointment, wet wrap therapy, dry wrap therapy, fumigating and washing therapy, bathing therapy, acupuncture and moxibustion, and umbilical wrap therapy. Moreover, we demonstrated underlying mechanisms by which oral CM drugs treat AD, and may thus aid AD external therapy development in the future.