With the implementation of global policies to ban and limit the use of antibiotics in animal husbandry, exploring safe and efficient alternatives to antibiotics has become a research hotspot in the feed industry. The "Feed Raw Materials Catalogue" of China includes 117 kinds of natural plants that are both edible and medicinal, laying a resource foundation for the development of Chinese herbal feed additives. Although Chinese herbal medicines have the potential for antibacterial, immunomodulatory and growth-promoting properties, they have long been limited by three core bottlenecks in practical application: difficult dissolution of components, low bioavailability of glycoside active ingredients, and the existence of endogenous toxicity in some medicinal materials with unclear mechanisms. Microbial fermentation technology combines traditional processing techniques with modern biotechnology, which provides an innovative path to solve the above-mentioned problems through the biodegradation, biotransformation of microbial enzyme systems and the synergistic action of bacteria and drugs. This article systematically expounded the latest research progress of microbial fermentation of Chinese herbal medicines. Firstly, the characteristics of the two mainstream processes, including liquid fermentation and solid fermentation, were compared and analyzed: although liquid fermentation was conducive to process control and scale, its cost was relatively high; solid fermentation was cost-effective and suitable for the feed industry, but the stability of product quality needed to be improved. Secondly, it elaborated in depth on the four core advantages and mechanism of action of microbial fermentation technology: first, it generated new active substances that the original medicinal materials did not possess through enzymatic modification by microorganisms, expanding the material basis of medicinal effects; second, through the dual mechanisms of physical cell wall breaking and biochemical transformation, the content of active ingredients and bioavailability were significantly increased; thirdly, the safety hazards were eliminated by specifically degrading toxic components (such as converting diester alkaloids into monoester ones); fourthly, by improving physical and chemical properties and flavor, the stability and palatability of the product could be enhanced. Furthermore, focusing on the practical demands of the feed industry, this paper categorized and recommended specific herbal substrates with high industrial potential: growth-promoting herbs (e.g., Astragalusand, Codonopsis), immunomodulatory herbs (e.g., Glycyrrhizaand, Ligustrum), and gut health-maintaining herbs (e.g., Loniceraand, Andrographis), providing a clear guideline for feed formulation. Based on this, this article summarized the empirical effects of microbial fermentation of Chinese herbal medicine in livestock and poultry production, including promoting growth performance by optimizing the intestinal microecology, enhancing barrier function and improving nutrient utilization rate, and improving meat quality by regulating muscle metabolism and antioxidant capacity; it alleviated oxidative stress and reduced disease susceptibility by activating signaling pathways, such as Nrf2. Finally, in response to the current challenges in industrialization, this article looked forward to future research directions: the need to use multi-omics technologies to precisely identify exclusive functional strains, establish a refined and standardized control system for the fermentation process, deeply analyze the mechanism of the "microbe-organism-immune" axis, and improve the toxicological safety evaluation system and product quality standards, in order to promote the transition of fermented Chinese herbs from the laboratory to industrial application, and contribute to the green development of the livestock industry.