Abstract: The development of a sports arbitration system is a critical pathway toward advancing the rule of law in sports and modernizing sports governance. Against the backdrop of sports reform and legal system development, this study systematically reviews the evolution, institutional characteristics, and practical challenges of sports arbitration systems both internationally and domestically. The study finds that the formation of the international sports arbitration system is closely tied to the revival and commercialization of the Olympic Movement. Its pivotal shift from reliance on the International Olympic Committee to independent operation in 1994 serves as a significant reference for China’s own system. China’s sports arbitration system originated with the enactment of the Sports Law of the People’s Republic of China in 1995 and was systematically implemented following the revised Sports Law in 2023. However, structural issues—such as complex relationships among arbitration entities, the hybrid nature of arbitration content combining sports-specific and civil-commercial elements, and the dual function of arbitration types handling both initial and appellate cases—pose practical challenges in terms of independence, professionalism, representativeness, cost, and efficiency. To address these, the study recommends deepening theoretical research, improving institutional frameworks, and strengthening professional capacity building. These steps will help align the sports arbitration system with the modernization of sports governance, protect the rights of sports participants, and promote the healthy and orderly development of sports.