The efficacy of traditional Chinese exercise (TCE)-based interventions in the improvement of sleep quality is controversial. In this systematic review, we aimed to summarize randomized controlled trials (RCTs) that outline the effects of TCE on sleep quality. Five databases (Web of Science, Embase, PubMed, Medline, and China National Knowledge Infrastructure) were searched for literature published before July 2022. RCTs examining TCE interventions were included. The treatment effects were estimated using a random-effect meta-analysis model with mean differences (MDs). There were 2 outcome scales for sleep quality; however, because they were extremely contrastive to be analyzed by standard MD, the scales were analyzed separately to ensure the accuracy of the results. This review was registered in the International Prospective Register of Systematic Reviews (identifier CRD42023421314). Twenty studies were included for analysis at last. The outcome was calculated using the Verran and Snyder-Halpern Sleep Scale (MD: 344.17, 95% confidence interval: 316.95 to 371.39, P < .00001) and Pittsburgh Sleep Quality Index to measure sleep quality (MD: -2.24, 95% confidence interval: -3.05 to -1.43, P < .00001), both showed improvement effect. In subgroup analysis, for patients with fibromyalgia, normal older adults, and non-Hodgkin lymphoma, chronic fatigue syndrome-like illness, knee osteoarthritis, nasopharyngeal carcinoma, pausimenia, insomnia, TCE could improve sleep quality. However, there was no significant improvement in stroke patients, breast cancer patients, normal college students, and episodic migraine patients. Tai Chi had greater effects in improving sleep quality than Qigong. In addition, the participants practice site, duration, and age did not influence the effects of TCE. TCE can improve sleep quality in specific populations in specific populations clinical applications. Tai chi should be considered first to improve sleep quality. However, further extensive trials and rigorous study designs should be conducted to strengthen the findings of this study. In addition, considering the large heterogeneity, the findings of our study should be interpreted cautiously.