Gan-Dan-Liang-Yi-Tang (GDLYT) is a Traditional Chinese Medicine that has been historically used for the treatment of insomnia. However, investigations into its pharmacological ingredients and the mechanism underlying its sedative and hypnotic effects remain limited. The present study reported the detailed mechanisms underlying the sedative and hypnotic effects of GDLYT. Kunming mice were administered GDLYT at various sub-hypnotic doses, which underwent sodium pentobarbital treatment test, pentetrazole induced convulsant studies and p-chlorophenylalanine (PCPA) induced insomnia model. Potentiated hypnotic and sedative effects in mice was studied, and also the changes in related neurotransmitter and immune factors were evaluated. The results suggested that GDLYT possessed weak sedative effects on pentetrazole-induced convulsive activity in normal mice at a dose of 1.3 mg/kg, with an increase in sleep onset in subhypnotic dose of sodium pentobarbital-treated mice. GDLYT was also able to alleviate insomnia induced by PCPA in the rodent models, and increased 5-hydroxytryptamine levels in the prefrontal cortex, hippocampus, hypothalamus and corpus striatum of PCPA-treated rats. Furthermore, the hypnotic effects of GDLYT were modified, which allowed for PCPA-induced immune system changes, including increased interleukin (IL)-1β, tumor necrosis factor-α and IL-2 expression levels. The results of the present study indicated that GDLYT induced sedative and hypnotic bioactivity by regulating serotonergic activity in the central nervous system and immune system.