Before being administered as medicinal products, Chinese herbal medicines (CHMs) must be processed and decocted for human consumption. While the presence of pesticide residues in CHMs is a major concern, pesticide dissipation behavior during CHM processing has rarely been reported. In this study, the dissipation of three pesticide residues in the CHM Paeoniae Radix Alba (PRA) was investigated during each step of industrial processing. The boiling process was found to significantly reduce pesticide residues (61–89%), and the peeling process also contributed to pesticide degradation (29–68%). The high temperature (60 °C) during the drying process led to further pesticide degradation. The processing factors of all three pesticides after each processing step were less than one, and the processing factors for the overall process were lower than 0.027, indicating that industrial processing clearly reduced the amount of pesticide residues (97.3–99.4%). The findings provide guidance for the safe use of fungicides in CHMs and can help establish maximum residue limits for PRA to reduce human exposure to pesticides.