Functional foods and herbal medicines have gained global demand due to their health benefits, which have led to increased consumer interest. Their contribution to health is associated to the existence of bioactive compounds with several pharmacological properties such as antidiabetic, antimicrobial, anticancer, and antiinflammatory activities etc. Several phytochemical compounds have been reported to prevent lifestyle disorders and diseases such as cardiovascular diseases, diabetes, obesity, and hypertension. Functional foods include dairy products, bakery products and cereals, nutraceuticals, fermented foods, probiotics and prebiotics, vegetables, and fruits, whereas herbal medicines include several herbal plants not limited to ginseng, ginkgo biloba, and ephedra etc. which are expressed in many several forms such as decoctions, capsules, powders, teas, and oils. The transformation of herbal medicines from general consumption has led to the infusion of herbal extracts into foods, leading to the development of herbal functional foods including porridges, soups, beverages, biscuits, candies, chocolates, and dietary supplements. Thus, this review aims to explore the synergistic pharmacological activities of functional foods and herbal medicines as well as the challenges shaping the industry. Following the growing demand of functional foods and herbal medicines, we found that similar bioactive compounds in functional foods and herbal medicines contribute to their health benefits. However, critical issues regarding the regulation of functional foods and herbal medicines to establish their safety and efficacy are still present. Therefore, research on functional foods and herbal medicines is necessary to confirm their safety and efficacy and thereby attract more consumers.