As a ubiquitous perceptual stimulus, color of red is not only the symbol of visual world but also the symbol of social interaction. A substantial amount of research has been conducted to explore the psychological functioning of red and achieved a great progress. This paper reviewed theoretical and empirical work that addresses the link between color and psychological functioning in humans. We began by elaborating color-in-context theory, which is designed to be a broad model of color and psychological functioning that can be used to explain and predict relations between color and affect, cognition, and behavior. To be specific, it covers six premises: a) color carries meaning; b) color influences psychological functioning; c) color effects are automatic; d) color meanings have two sources: learning and biology; e) relations between color perception and affect, cognition, and behavior are reciprocal; f) color meanings and effects are context specific. In the following, we also overviewed several lines of empirical work that had emerged from this theoretical framework, starting with research on red in sports competition contexts, moving on to research on red in achievement contexts, and concluding with research on red in affiliation/attraction contexts. In addition, the authors comprehensively elaborated their recent investigations on red’s psychological functioning in Chinese society, i.e., how color of red affects Chinese prediction in finance, sports competition, and achievement contexts. Based on the empirical comparison conducted among Mainland China, Hong Kong, and Poland, convergent findings suggest that in finance contexts, people from Mainland China tend to predict a higher economic growth in red condition rather than in green condition. The prediction pattern is opposite for Hong Kong people. However, in sports competition and achievement contexts, results show that both Chinese and Westerners demonstrate similar red effect, i.e., individuals’ performance is undermined by red in achievement contexts but facilitated by red in sports competition contexts. Therefore, color of red displays different psychological functioning across cultures. In the following sections, different perspectives were overviewed to explain the underlying mechanism of red’s psychological functioning, including biology perspective, motivation perspective, and emotion perspective. In the end of the paper, the issues of future direction were discussed, i.e., future investigations should pay more attention to the underlying mechanism and cultural specificity of psychological functioning of red.