The Chinese medicine Yangyin Huowei mixture (YYHWM) exhibits good clinical efficacy in the treatment of chronic atrophic gastritis (CAG), but the mechanisms underlying its activity remain unclear. To investigate the therapeutic effects of YYHWM and its underlying mechanisms in a CAG rat model. Sprague-Dawley rats were allocated into control, model, vitacoenzyme, and low, medium, and high-dose YYHWM groups. CAG was induced in rats using N-methyl-N'-nitro-N-nitrosoguanidine, ranitidine hydrochloride, hunger and satiety perturbation, and ethanol gavage. Following an 8-wk intervention period, stomach samples were taken, stained, and examined for histopathological changes. ELISA was utilized to quantify serum levels of PG-I, PG-II, G-17, IL-1β, IL-6, and TNF-α. Western blot analysis was performed to evaluate protein expression of IL-10, JAK1, and STAT3. The model group showed gastric mucosal layer disruption and inflammatory cell infiltration. Compared with the blank control group, serum levels of PGI, PGII, and G-17 in the model group were significantly reduced (82.41 ± 3.53 vs 38.52 ± 1.71, 23.06 ± 0.96 vs 11.06 ± 0.70, and 493.09 ± 12.17 vs 225.52 ± 17.44, P < 0.01 for all), whereas those of IL-1β, IL-6, and TNF-α were significantly increased (30.15 ± 3.07 vs 80.98 ± 4.47, 69.05 ± 12.72 vs 110.85 ± 6.68, and 209.24 ± 11.62 vs 313.37 ± 36.77, P < 0.01 for all), and the protein levels of IL-10, JAK1, and STAT3 were higher in gastric mucosal tissues (0.47 ± 0.10 vs 1.11 ± 0.09, 0.49 ± 0.05 vs 0.99 ± 0.07, and 0.24 ± 0.05 vs 1.04 ± 0.14, P < 0.01 for all). Compared with the model group, high-dose YYHWM treatment significantly improved the gastric mucosal tissue damage, increased the levels of PGI, PGII, and G-17 (38.52 ± 1.71 vs 50.41 ± 3.53, 11.06 ± 0.70 vs 15.33 ± 1.24, and 225.52 ± 17.44 vs 329.22 ± 29.11, P < 0.01 for all), decreased the levels of IL-1β, IL-6, and TNF-α (80.98 ± 4.47 vs 61.56 ± 4.02, 110.85 ± 6.68 vs 89.20 ± 8.48, and 313.37 ± 36.77 vs 267.30 ± 9.31, P < 0.01 for all), and evidently decreased the protein levels of IL-10 and STAT3 in gastric mucosal tissues (1.11 ± 0.09 vs 0.19 ± 0.07 and 1.04 ± 0.14 vs 0.55 ± 0.09, P < 0.01 for both). YYHWM reduces the release of inflammatory factors by inhibiting the IL-10/JAK1/STAT3 pathway, alleviating gastric mucosal damage, and enhancing gastric secretory function, thereby ameliorating CAG development and cancer transformation.