Medicinal plants have a significant role in human health care since the development of medicine. Plants that yield phytopharmaceuticals have produced a variety of compounds that benefit both humans as well as animals. With the advancement of next-generation sequencing (NGS) technologies, there is a growing interest in sequencing the genomes and transcriptomes of these life-saving plants. RNA sequencing (RNA-Seq) is one of the most advanced and powerful techniques for searching the transcripts in model as well as in non-model organisms. It is a highly sensitive, high-throughput, and high-resolution approach. In addition to analysing functional genes and regulatory mechanisms of herbal plants, transcriptomics can also aid in improving selection and cultivation methods. Even though fewer genomes have been sequenced or are being addressed, transcriptome sequencing has exponentially increased in the last couple of years, covering all important medicinal plant genera. The objective of this updated comprehensive review is to provide an overall perspective of the current status, progress, opportunities, and challenges of these sequencing efforts. In addition, a broad overview of the different generations in transcriptomics analysis, model and non-model plants that are sequenced till the year 2022, and applications of NGS in novel genes identification, their functions, as well as pathway analysis are also discussed. The information provided here emphasizes on a better understanding of the current trends and future directions in this fascinating plant genome sequencing technology.