Bronchopulmonary dysplasia (BPD), the most common late morbidity in preterm infants, is characterized by impaired alveolar development caused by persistent lung inflammation. Studies have shown that NOD-, LRR- and pyrin domain-containing 3 (NLRP3) inflammasome-mediated inflammation is critically involved in the development of BPD. As a traditional Chinese medicinal herb, Eclipta prostrata (EAP) exhibits potent anti-inflammatory properties. Our study aims to investigate whether EAP could improve the lung development of BPD by suppressing the lung inflammatory response. The BPD rat model was established by intra-amniotic injection of lipopolysaccharide (LPS) and postnatal exposure to hyperoxia. Changes in the NLRP3 inflammasome and pyroptosis were assessed by treatment with EAP. The effect of EAP on the NLRP3 inflammasome was tested in vitro using the THP-1 cell line and primary alveolar macrophages. Proteomics analysis was used to elucidate the mechanism of action of EAP. Histopathological and immunofluorescence results of lung tissues revealed that LPS and hyperoxia induced lung injury and triggered NLRP3 inflammasome activation and pyroptosis in alveolar macrophages. EAP ameliorated BPD lung injury, inhibited NLRP3 inflammasome activation and reduced gasdermin D (GSDMD) expression in alveolar macrophages. EAP downregulated the expression of NLRP3 inflammasome pathway molecules (NLRP3, caspase-1, and IL-1β) and GSDMD in LPS-stimulated THP-1 macrophages and primary alveolar macrophages. In addition, proteomics analysis identified that dihydrolipoamide dehydrogenase (DLD) interacted with EAP. Inhibition of DLD activity abolished the protective effects of EAP. Our study suggested that EAP could attenuate arrest of alveolar development via inhibiting NLRP3 inflammasome in a DLD-dependent way, and could be a potential therapeutic method for BPD.