The State Food and Drug Administration ordered the producer of Zhixue capsules to cease production and begin a nationwide recall, Xinhua news agency reported.
The recall came after 21 people around the country developed liver problems after taking the drug in recent months, it reported.
Another 14 people reported various other adverse reactions.
The medication is made by Vital Pharmaceutical Holdings Ltd, based in the southwestern province of Sichuan.
Bans and recalls of Chinese food and drug products are common due to widespread safety problems in the chaotic and under-regulated industry.
Four children died and 53,000 were made ill in China after drinking milk or milk products laced with the industrial chemical melamine, in a scandal that emerged in September and has rocked China's dairy industry.
The melamine was added to give the appearance of a higher protein content.
Last month, some brands of eggs were pulled off shelves nationwide after melamine was detected in Chinese-produced eggs sold in Hong Kong.
The melamine was believed to have been added to chicken feed given to the egg-producing hens.