The Chinese caterpillar fungus, Ophiocordyceps sinensis, is well known for its great value in medical use and healthcare. As a consequence, research on the biological characteristics of O. sinensis and sustainable utilization of this valuable resource have received substantial efforts. There are several aspects in the biological and ecological research on O. sinensis that are particularly important, including the (1) pathways and mechanisms of how Hepialidae larvae are infected by O. sinensis; (2) predominant factors that regulate O. sinensis stroma formation and development; (3) O. sinensis genetic diversity and genomics; (4) microbial communities that inhabit the natural Chinese caterpillar fungus and their interaction with O. sinensis; and (5) impact of climate change on O. sinensis habitats in the Tibetan Plateau under global warming. The present review summarized the progress that has been achieved regarding these crucial aspects in the current research. Certain limitations in the current research that are not well understood or inadequately investigated were highlighted to motivate the biological and ecological research of O. sinensis in the future. Based on the thorough review, it was proposed that to maintain the sustainable utilization of natural Chinese cordyceps, the following aspects should be considered a priority in the future:(1) the development of advanced equipment and experimental techniques for in situ observation of colonization and sexual reproduction processes of O. sinensis; (2) determining the mechanisms underlying environmental fitness and pathogenicity of O. sinensis at the genomic level using molecular technology and artificial cultivation; and (3) predicting the impact of climate change on the distribution and yield of Chinese cordyceps by long-term field observation in combination with ecological models.