Background Biqi capsule is a traditional Chinese medicine widely used as a complementary and alternative treatment for rheumatoid arthritis (RA). The objective is to understand the efficacy, safety and mechanism of Biqi combined with methotrexate (MTX) in RA. Methods We present a randomized, controlled pilot trial on Biqi combined with MTX against patients with active RA. Seventy patients were randomized 1:1 to receive Biqi + MTX or Leflunomide (LEF) + MTX for 24 weeks, and were assessed at baseline, 4, 12 and 24 weeks. Serum and urine samples were collected for metabolomics. Results Overall, 81.2% patients in Biqi group achieved ACR20 at 24 weeks. No statistically significant differences were observed in primary or secondary outcomes between the two groups. A better safety profile was observed for Biqi with significantly fewer adverse effects reported (11.4%) compared to LEF group (40%, P < 0.05). Comparison between treatment responders and non-responders indicated a unique urine metabolic profile of enriched fatty acids and decreased acylcarnitines associated with Biqi responders, indicating a restored energy homeostasis in response to Biqi. The gene targets of these metabolites were significantly enriched in interleukin-4 and interleukin-13 pathways, implying that Biqi could ameliorate Th2-derived inflammatory response. Multivariate network analysis indicated that patient morning stiffness and SJC were key factors associated with metabolomics in Biqi-treated patients, whereas CRP was the main factor in LEF group. Therefore, Biqi and LEF likely work by influencing different patient clinical parameters. Conclusions Our study suggests that Biqi capsule can be a promising alternative option in combination with MTX for RA treatment, and demonstrates the capability of using metabolomics to interrogate mechanism of action for traditional Chinese medicine. Trial registration This trial is registered with ChiCTR, No. ChiCTR-IPR-16009029. Registered August 15, 2016.