Introduction Psoriasis vulgaris is a common skin disease that is characterised by persistent localised erythematous scaly plaques. Yinxieling is a Chinese herbal formula for psoriasis that has been used for more than 20 years in China. To facilitate application, PSORI-CM01 was developed based on the optimisation and simplification of Yinxieling tablets performed in a previous study and in clinical practice. However, the scientific evidence regarding whether PSORI-CM01 is more effective for psoriasis than the original Yinxieling remains insufficient. Therefore, we designed a randomised clinical trial to investigate the effect, safety and cost-effectiveness of PSORI-CM01 granules compared with those of Yinxieling tablets for the treatment of patients with psoriasis. Methods and analysis This ongoing study is a two-arm parallel, randomised, double-blind, double-dummy clinical trial. Five hundred and fifty-six participants with psoriasis will be recruited and then randomly allocated into two groups in a 1: 1 ratio. Participants in PSORI-CM01 group will receive a 5.5 g granule of PSORI-CM01 two times daily and five placebo tablets three times daily for 12 weeks. The participants in the Yinxieling group will receive five Yinxieling tablets three times daily and a placebo granule two times daily for 12 weeks. The primary outcome is the reduction of the Psoriasis Area and Severity Index. The secondary outcomes include relapse rate, Visual Analogue Scale scores, body surface area and the Dermatology Life Quality Index. Cost-effectiveness analysis will be performed from a health and community care provider perspective. Ethics and dissemination This research protocol had been reviewed and approved by the institutional review boards of three trial centres (Guangdong Provincial Hospital of Chinese Medicine (B2014-026-01), Affiliated Hospital of Tianjin Chinese Medicine Academy (2014-KY-001) and Third Hospital of Hangzhou (B2014-026-01)). The findings will be disseminated to the public through conference presentations and open-access journals.