Traditional medicinal plants represent a rich repository of bioactive compounds that have significantly influenced modern pharmaceutical development. This review examines the phytochemical profiles, molecular mechanisms, and therapeutic applications of plant-derived natural products in contemporary drug discovery. Key phytochemical classes including alkaloids, flavonoids, terpenoids, saponins, and phenolic compounds are analyzed for their mechanistic pathways involving antioxidant activity, enzyme inhibition, receptor modulation, and signal transduction interference. The translational pipeline from ethnopharmacological knowledge to clinical therapeutics is critically evaluated, highlighting successful drug development examples in oncology, cardiology, neurology, and infectious diseases. Despite substantial progress, challenges persist regarding standardization, bioavailability optimization, and clinical translation. This comprehensive analysis underscores the continued relevance of medicinal plants as valuable sources for novel therapeutic agents and provides insights into future directions for phytochemical-based drug development.