The development and evolution of regulation, production and clinical application of Foods for Special Medical Purposes (FSMPs) in China in recent decades have been reviewed. The FSMPs as dysphagia diet and relevant applications of food hydrocolloids in FSMPs from the viewpoint of rheology were emphasized. Consumer preference, behaviour and perception about FSMPs were also presented. It is a remarkable transition of the legal status of FSMPs from “drugs” to “foods” in China, just as that in USA and EU, which is marked as a milestone by several important national standards and related laws issued in the last decade. The huge market capacity of FSMPs in China has been estimated based on the number of malnourished patients and elderly consumers. However, the supply of FSMPs from both multinational and local producers has not met the strong demand in China market, even though the State Administration for Market Regulation (SAMR) has approved 92 new products by December 2022. Nevertheless, the market prospect is quite optimistic, based on the profound recognition and widespread clinical application of FSMPs in specific diseases, such as dysphagia, cancer, diabetes, chronic kidney disease, etc.