Atopic dermatitis (AD) is a long-lasting inflammatory skin disease that contributes to the global health burden and impacts 10–20% of the world’s population. In this study, we determined the anti-AD effect of a by-product of silkworm (Bombyx mori) larval powder, strain Yeonnokjam (SLPY), as a sustainable, natural source for the development of therapeutic agents for AD. HaCaT cells were used to assess the in vitro anti-inflammatory activity of SLPY, and a 1-chloro-2,4-dinitrobenzene (DNCB)-induced mouse model was used to study the in vivo anti-AD effects. SLPY treatment downregulated the expression of the inflammatory cytokines TNF-α, IL1β, IL-8, and Cox-2 in stimulated HaCaT cells. Similarly, the topical application of SLPY in DNCB-treated mice downregulated the expression of inflammatory cytokines and proteins while ameliorating the clinical features of AD. Further, SLPY treatment inhibited the nuclear translocation of NF-κb p65, thereby supporting the efficacy of SLPY in the treatment of AD.