Bt toxin is a macromolecular protein derived from Bacillus thuringiensis with special insecticidal function. Its preparation and transgenic crops have been widely used in pest control, and have produced huge economic and social ecological benefits. Exploiting and improving the application value of Bt toxin is a hot spot of continuous research. In particular, as the structure and function of Bt toxin and its mechanism of action appear clearer, it has created conditions for its functional modification and innovative application. As a result, the related research has flourished and achieved remarkable results. A large number of studies have shown that strategies such as site directed mutagenesis, domain replacement or fusion, and anti-idiotype antibody simulation are effective means to rationally design novel insecticidal proteins with higher activity, greater stability, wider insecticidal spectrum and higher non-target biosecurity. Those novel insecticidal proteins are different from parent Bt toxins, of which are mutants, structural heterozygotes and even functional effector antibodies. In addition, it is also an important approach to promote the application value of Bt toxin by use of innovative synergistic strategies such as catalytic toxin activation, driving toxin-targeted receptor binding, promoting toxin expression and the synergistic effect of combination or co-expression of homologous or heterologous insecticidal materials. This paper summarizes the structure and function of Bt toxin and its mechanism of action. It also reviews the research progress in rational design of novel insecticidal proteins such as mutants, structural heterozygotes and functional effector antibodies based on Bt toxin function modification, and innovative application strategies based on Bt toxin function enhancement. The future development trend and potential shortcut of rational design and innovative application strategy for insecticidal protein based on Bt toxin were discussed. Furthermore, the author’s team combined it with the latest achievements in targeting design and development of the insecticidal function effector antibodies simulating Bt toxin. This paper is expected to provide more comprehensive and valuable literature information and enlighten ideas for the related research based on Bt toxin.