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Background  Drug repositioning, also known as drug repurposing, defines new indications for existing drugs and can be used as an alternative to drug development. In recent years, the accumulation of large volumes of information related to drugs and diseases has led to the development of various computational approaches for drug repositioning. Although herbal medicines have had a great impact on current drug discovery, there are still a large number of herbal compounds that have no definite indications.    Results  In the present study, we constructed a computational model to predict the unknown pharmacological effects of herbal compounds using machine learning techniques. Based on the assumption that similar diseases can be treated with similar drugs, we used four categories of drug-drug similarity (e.g., chemical structure, side-effects, gene ontology, and targets) and three categories of disease-disease similarity (e.g., phenotypes, human phenotype ontology, and gene ontology). Then, associations between drug and disease were predicted using the employed similarity features. The prediction models were constructed using classification algorithms, including logistic regression, random forest and support vector machine algorithms. Upon cross-validation, the random forest approach showed the best performance (AUC = 0.948) and also performed well in an external validation assessment using an unseen independent dataset (AUC = 0.828). Finally, the constructed model was applied to predict potential indications for existing drugs and herbal compounds. As a result, new indications for 20 existing drugs and 31 herbal compounds were predicted and validated using clinical trial data.    Conclusions  The predicted results were validated manually confirming the performance and underlying mechanisms – for example, irinotecan as a treatment for neuroblastoma. From the prediction, herbal compounds were considered to be drug candidates for related diseases which is important to be further developed. The proposed prediction model can contribute to drug discovery by suggesting drug candidates from herbal compounds which have potentials but few were studied.    Electronic supplementary material  The online version of this article (10.1186/s12859-019-2811-8) contains supplementary material, which is available to authorized users.

Drug repositioning of herbal compounds via a machine-learning approach