This paper aims to review the research status of the effect mechanism of catgut-embedding therapy. The literature was retrieved from China Academic Journal Network Publishing Database with the keywords as "catgut-point embedding" "embedding", dated from the database establishment to December 2015. Totally, over 5 000 papers had been collected. It was summarized that TCM effect mechanism of catgut-point embedding therapy includes the effects of needle retaining and embedding, harmonizing yin and yang, balancing zangfu organs, promoting meridian qi, regulating qi and blood, tonifying for the deficiency and reducing for the excess, strengthening the antipathogenic qi and eliminating pathogens. From the point of view of western medicine, the effect mechanism of catgut-embedding therapy refers to recovering nerve function, regulating neural reflex, increasing human immunity, improving local circulation, inhibiting the release of inflammatory factors, reducing apoptosis, regulating cellular factor and improving body metabolism. It was found that the effects of catgut-embedding therapy were not only related to the effects induced by common acupuncture, but also to the persistent treatment through prolonged stimulation duration, especially in the treatment of chronic diseases with many systems involved. This therapy reduces or complements to the use of western medicine to certain extent. However, the longitude theoretic study on the catgut-embedding therapy is limited; the specific statement is less predominant and the clinical controlled trial is insufficient at present. Hence, further studies are requested.