This article focuses on current regulations that address functional foods in the U.S., the largest functional food ingredient market worldwide. The term "functional food" originated from FOSHU (Food for Special Health Uses) in Japan. The term migrated to the U.S. and the Europe, but with no legislative definitions in these countries. In the U.S., depending on how a product is marketed and depending on the nature of any claims made, functional foods may be regulated by FDA as conventional foods, dietary supplements, medical foods, or "food for special dietary use". The scope of the article is to discuss how limitations in regulations in the U.S. could hinder functional food development, by making horizontal comparison to current medical food regulation in the U.S. on one hand, and on the other by vertical comparisons to recently updated health food regulation in China, as an example of functional food regulation in emerging economies.