Mu Dan Pi (MDP), also known as Moutan Cortex Radicis, is a traditional Chinese medicine used to treat autoimmune diseases. However, the impact of MDP and its principal active compounds on inflammatory bowel disease (IBD) is uncertain. This study therefore systemically assessed the anti-inflammatory effects of MDP and its known active compounds in IBD. The anti-inflammatory activities of water extract and individual compounds were screened by NF-κB and interferon regulatory factor (IRF) reporter assays in THP-1 cells induced with either Toll-like receptor or retinoic acid inducible gene I/melanoma differentiation-associated gene 5 activators and further verified in bone marrow-derived macrophages. MDP water extract significantly inhibited the activation of NF-κB and IRF reporters, downstream signaling pathways and the production of IL-6 and TNF-α, in a dose-dependent manner. Among 5 known active components identified from MDP (1,2,3,4,6-penta-O-galloyl-β-d-glucose [PGG], gallic acid, methyl gallate, paeoniflorin, and paeonol), PGG was the most efficient at inhibiting both reporters (with an IC50 of 5-10 µM) and downregulating IL-6 and TNF-α. Both MDP powder for clinical use and MDP water extract, but not PGG, reduced colitis and pathological changes in mice. MDP and its water extract show promise as a novel therapy for IBD patients.