Smart farm is a breakthrough technology that can maximize crop productivity and economy through efficient utilization of space regardless of external environmental factors. This study was conducted to investigate the optimal growth and physiological conditions of Chinese matrimony vine (Lycium chinense) with LED light sources in a smart farm. The light source was composed of red+blue and red+blue+white mixed light using a LED system. In the red+blue mixed light, red and blue colored LEDs were mixed at ratios of 1:1, 2:1, 5:1, and 10:1, with duty ratios varied to 100%, 99%, and 97%. The experimental results showed that the photosynthetic rate according to the types of light sources did not show statistically significant differences. Meanwhile, the photosynthetic rate according to the mixed ratio of the red and the blue light was highest with the red light and blue LED ratio of 1:1 while the water use efficiency was highest with the red and blue LED ratio of 2:1. The photosynthetic rate according to duty ratio was highest with the duty ratio of 99% under the mixed light condition of red+blue+white whereas the water use efficiency was highest with the duty ratio of 97% under the mixed light of red+blue LED. The results indicate that the light source and light quality for the optimal growth of Lycium chinense in the smart farm using the LED system are the mixed light of red+blue (1:1) and the duty ratio of 97%.