Throughout history, Matricaria chamomilla L. (M. chamomilla) has had countless applications in traditional medicine. Its extracts, oils and teas have been used for treating diverse ailments, including wounds, rheumatic pain, menstrual cramps, eye and ear infections, gastrointestinal disorders, and respiratory illnesses. These traditional applications guided modern research into its medicinal effects through increasingly detailed in vitro and in vivo studies and clinical trials. A plethora of preclinical studies have assessed the antimicrobial, antioxidant, anti-inflammatory, antiulcer, hypoglycemic, hypolipidemic, cardioprotective, hepatoprotective, neuroprotective, nephroprotective, anti-diarrheal, antispasmodic, wound healing, and anticancer properties of M. chamomilla. These pharmacological properties of M. chamomilla are attributed to its rich reservoir of phytochemical constituents, primarily its flavonoids, such as luteolin, apigenin, and quercetin, as well as its sesquiterpenes, mainly chamazulene and (−)-α-bisabolol. Remarkably, preclinical studies have paved the way for progress towards controlled human clinical trials. M. chamomilla has been clinically evaluated for its effects against anxiety, sleep-deficiency, depression, as well as oral, women-related, inflammatory, metabolic, dermatological, gastrointestinal disorders, and children-related conditions. In this sense, this review elucidates and discusses the recent findings for M. chamomilla development as a therapeutic agent that possesses health-promoting, disease-preventing and even treatment properties. The traditional medicinal uses and evidence-based research studies, which were performed in cell culture, animal models and human subjects to assess the pharmacological activities of M. chamomilla, are extensively highlighted. Particular emphasis is given to some phytochemical constituents of M. chamomilla, which demonstrate great potential in treating various conditions.