Liver fibrosis represents the wound healing response to liver injury from a wide variety of etiologies. Remarkable progresses have been shown in the field of liver fibrosis in a range of areas in the past years. In particular, the reversibility of liver fibrosis has been well documented in both patients and animal models. Great progresses have been made in the treatment of liver fibrosis with Chinese medicine. This review summarizes the effects of Fuzheng Huayu Capsule (扶正化瘀胶囊, FZHYC) in treating liver fibrosis and inflammation induced by chronic hepatitis B in clinical trials and the mechanism of action of FZHYC in reversing liver fibrosis in vivo and in vitro experiments.