Hypercholesterolemia is closely associated with the risk of cardiovascular diseases. Medicinal and dietary approaches are both used to combat it. Red yeast rice (RYR) is a traditional ingredient that has been used for a long time in food preparation. Interestingly, it shows activity to alleviate hypercholesterolemia as a food supplement due to the high content of lovastatin (also known as monacolin K), a statin drug. To gain a comprehensive understanding of RYR and its functions, we have reviewed the current literature from PubMed. This review summarizes the RYR historical use in traditional Chinese medicine and compares it with statins for controlling hypercholesterolemia. In addition, we have also included the side effects of RYR, its impacts on the heart, liver, and muscle, and the limitations of current research. The needs to reduce side effects while providing the same bioavailability and efficacy of RYR for the alleviation of hypercholesterolemia are important for its benefits in health. We believe that more research is needed to thoroughly investigate RYR and find novel compounds with activities to control hypercholesterolemia and help subjects who are sensitive to statin-mediated side effects.