Yellow tea, also known as huángchá in Chinese, is a lightly fermented tea unique to China. As a rare and precious variety of tea, it has gained increasing popularity in recent years because of its pleasant mellow taste and known health benefits such as anti-oxidation, anti-inflammation and anti-cancer properties. Yellow tea is similar to green tea in many ways. The initial production process of both teas is the same, but the production of yellow tea requires additional steps. A unique procedure called “sealed yellowing” is always involved in yellow tea processing to increase the oxidation level and remove the characteristic grassy smell associated with green tea while still preserving its health benefits. Compared to other types of teas, yellow tea is much less well-known and studied. In this review, the history and classification of yellow tea are introduced. The processing procedures, including detailed information about “sealed yellowing”, are presented. The bioactive chemical compounds common in various types of teas or unique to yellow tea are discussed. Finally, future needs in research and development of yellow tea are proposed.