In-stent restenosis (ISR) is the main factor affecting the outcome of percutaneous coronary intervention (PCI), and its main pathological feature is neointimal hyperplasia. Huotan Jiedu Tongluo decoction (HTJDTLD) is an effective traditional Chinese medicine (TCM) prescription for the treatment of vascular stenosis diseases. However, the precise anti-ISR mechanism of HTJDTLD remains unclear. Here, we investigated whether HTJDTLD can inhibit the excessive activation of endoplasmic reticulum stress (ERS) and reduce the level of autophagy factors through regulating the PERK-eIF2α-ATF4 pathway, thereby inhibiting the proliferation of the intima of blood vessels damaged by balloon injury (BI) and preventing the occurrence of ISR. In this study, a 2F Fogarty balloon was used to establish a common carotid artery (CCA) BI model in male Sprague-Dawley rats. Then, HTJDTLD (16.33 g/kg/d) or atorvastatin (1.19 mg/kg/d) was administered by gavage. Four weeks later, hematoxylin-eosin (HE) and Masson staining of the injured CCA were performed to observe the histological changes in the CCA. Immunohistochemistry (IHC) was used to assess the proliferation and dedifferentiation of vascular smooth muscle cells (VSMCs) in the CCA. Western blotting and RT-PCR were used to measure the expression of ERS- and autophagy-related proteins and mRNAs in the CCA. The results indicated that HTJDTLD significantly alleviated BI-induced carotid artery intimal hyperplasia and fibrosis and reduced the neointimal area (NIA) and NIA/medial area (MA) ratio. In addition, HTJDTLD inhibited the proliferation and dedifferentiation of VSMCs, reduced the expression of proliferating cell nuclear antigen (PCNA), and increased the smooth-muscle-α-actin- (SMα-actin-) positive area. HTJDTLD also significantly reduced the expression of the ERS-related factors: GRP78, p-PERK/PERK, p-eIF2α/eIF2α, ATF4, and CHOP. In addition, the expression of the autophagy-related factors, Beclin1, LC3B, and ATG12, was significantly decreased. In addition, in vitro experiments showed that HTJDTLD inhibited the above-mentioned ERS signal molecules in human umbilical vein endothelial cells (HUVEC) and rat aortic smooth muscle cells (A7R5) induced by tunicamycin (TM) and played a crucial role in protecting cells from damage. HTJDTLD may be a very promising drug for the treatment of ISR.