BackgroundTraditional Chinese medicinal formula (TCMF) has specific advantages in treating diseases. However, the pharmacological effects and mechanism of TCMF composed of traditional Chinese medicines (TCM) with unclear active components or targets have not yet been fully elucidated.ObjectivesThis research proposed a strategy for elucidating the pharmacological effects and mechanism to address this issue systematically.MethodsWith Guilin Xiguashuang (GLXGS) taken as a case, this study newly provided the multi‐level assays, which decomposes TCMF into components, TCM, and TCMF levels. The main pharmacological effects were acquired through a comprehensive analysis based on the active components, pharmacological effects of TCM, and clinical efficacy of TCMF, respectively. The core targets and pathways were further identified and verified to elucidate the mechanism.ResultsThe main pharmacological effects of GLXGS were anti‐inflammatory, analgesic, antibacterial, immunoregulatory, and wound healing. Moreover, the mechanism analysis demonstrated that GLXGS was involved in the regulation of NF‐κB and VEGF signaling pathways and core targets, such as IL‐6 and TNF‐α. Finally, unproven immunomodulatory and anti‐inflammatory mechanism were verified using RAW264.7 and THP‐1 cells. GLXGS was verified to down‐regulate IL‐6, IL‐1β, TNF‐α, and CD86 in lipopolysaccharides‐stimulated RAW264.7 cells, while enhancing polarization in both RAW264.7 and THP‐1 cells, which were consistent with analysis results.ConclusionThe present research provides a systematic strategy for the pharmacological effect prediction and mechanism analysis of TCMF, which is of great significance for studying complex TCMF.