Alzheimer's disease (AD) presents a growing societal challenge, driven by an aging population. It is characterized by neurodegeneration linked to β-amyloid (Aβ) and tau protein aggregation. Reactive glial cell-mediated neuroinflammation exacerbates disease progression by facilitating the accumulation of Aβ and impairing its clearance, thus highlighting potential therapeutic targets. Aerial parts of Artemisia iwayomogi (AIH), a kind of mugwort, has been consumed as a medicinal herb in East Asia for relieving inflammation-related diseases. Previously, AIH was found to exert potent inhibitory effects on neuroinflammation. This study aimed to examine whether AIH mitigates AD pathogenesis by regulating neuroinflammation and reducing Aβ deposition. AIH treatment to primary mixed glial cultures attenuated the pro-inflammatory responses evoked by Aβ stimulation. When treated to 5 × familial AD (5xFAD) mice, AIH improved learning and cognitive ability and reduced Aβ burden in the brain. AIH suppressed glial overactivation, as well as inhibited the expressions of pro-inflammatory mediators in the brain. Moreover, AIH regulated AKT signaling and elevated the expression of autophagy-lysosomal mediators in vitro. It was confirmed that lysosome-associated membrane protein 1 (LAMP1) was increased in the Aβ-associated microglia in the mouse hippocampus. Finally, it was observed that tau phosphorylation was alleviated, and synaptic protein expression was increased in AIH-treated 5xFAD mice. Overall, this study demonstrated that AIH ameliorated excessive neuroinflammation and Aβ accumulation by regulating microglial activation and autophagy-lysosomal pathway, thereby suggesting AIH as a promising therapeutic candidate for AD treatment.