Chinese Baijiu distiller's grains represent a major by-product of the Baijiu brewing industry. The solid-state or liquid-state multi-strain fermentation process endows them with complex chemical compositions and functional properties, conferring considerable potential for further development. This study describes the chemical composition of Chinese Baijiu distiller's grains, discusses the differences in functional components arising from the brewing processes of various Baijiu aroma types, and evaluates advanced extraction techniques targeting core components, including proteins, dietary fibers, and polyphenols. The biological activities of Chinese Baijiu distiller's grain extracts, such as antioxidant, antihypertensive, and immunoregulatory effects, as well as their underlying mechanisms of action, are summarized. Furthermore, the application prospects of these extracts as functional food ingredients are also explored.