Astragalus membranaceus, a traditional Chinese herb, has been used to improve airway inflammation and asthma. The present study investigated whether A. membranaceus has immunotherapeutic effects on asthma, a chronic inflammatory mucosal disease that is associated with excess production of IgE, eosinophilia, T helper 2 (Th2) cytokines, and bronchial hyperresponsiveness. An ovalbumin (OVA)-induced, chronic inflammatory airway murine asthma model was used to examine the status of pulmonary inflammation after the administration of A. membranaceus. The IgE levels in serum and bronchoalveolar lavage fluid showed a tendency to decrease after the administration of A. membranaceus. The number of eosinophils decreased and infiltration of inflammatory cells and collagen deposition declined in lung sections after A. membranaceus administration. The RNA and protein levels of Th2 cytokines and the ratio of the GATA3/T-bet mRNA levels decreased after A. membranaceus treatment. Furthermore, the mRNA level of peroxisome proliferator-activated receptor γ (PPARγ), a nuclear hormone receptor, increased in the lung tissues of A. membranaceus-treated mice. Finally, an A. membranaceus water extract activated PPARγ activity in either human embryonic kidney 293 (HEK293) or A549 cells in a PPARγ-responsive element-containing luciferase reporter assay. These results indicate that A. membranaceus has an inhibitory effect on airway inflammation in a murine model of asthma through modulating the imbalanced relationship between Th1 and Th2 cytokines.