Wang-Bi Capsule (WB), a traditional Chinese medicine- (TCM-) based herbal formula, is currently used in clinic for the treatment of rheumatoid arthritis (RA) with positive clinical effects. However, its pharmacological mechanism of action in RA is still obscure. Therefore, this study established a collagen-induced arthritis (CIA) mice model to examine the efficacy of WB by using arthritis score, histological analysis, and micro-CT examination. Proinflammatory cytokines expression, osteoclast number, OPG/RANKL system, and NF-kappa B activation were then detected to further investigate the mechanism of WB in RA treatment. The results indicated that WB could alleviate the erythema and swelling of paws in CIA mice. It also inhibited the infiltration of inflammatory cells and bone destruction and increased bone density in joints of CIA mice. Mechanistic studies showed that WB treatment decreased the production of IL-1 beta, IL-6, and TNF-alpha in serum and joints of CIA mice. Moreover, it reduced the osteoclast number, increased OPG level, decreased RANKL level, and inhibited the activation of NF-kappa B in joints of CIA mice. In conclusion, this study demonstrated that WB could effectively alleviate disease progression of CIA mice by decreasing the IL-1 beta, IL-6, and TNF-alpha levels, modulating the OPG/RANKL system, and inhibiting the activation of NF-kappa B.