Sericulture is a traditional agro-industry, which involves mulberry cultivation and silkworm rearing, has made great contributes to the human civilization. With the development of national economy and modem technology, mulberry and silkworm are being used to develop products with functionality besides the traditional cocoon production in China. In this paper, we brief the current developing situation of sericultural byproducts with functionality in the following aspects. (1) Functional products from silkworm larvae: silkworm powder, white muscardine silkworm, isolation and purification of anti-bacterial proteins from the larvae and production of medically valuable substances by Bombyx mori nuclear polyhedrosis virus (BmNPV) vector. (2) Utilization of silkworm feces: for pillow and for isolation of chlorophyll etc. (3) Production of valuable Chinese traditional medicine like Cordyceps sinensis with pupae, functional utilization of pupa protein and chitin. (4) Silk as additives to cosmetics, silk food and medical materials. (5) Functional utilization of mulberry: cultivation of edible fungus on mulberry shoots as medium, mulberry fruit drinks, mulberry tea, etc. The prospect of sericultural byproduct industry in China is also discussed.