Although there has been some success with protein-based anti-tumor necrosis factor alpha (TNF-alpha) therapeutics, the problems associated with protein-based drugs demand alternative approaches. We screened various herbal extracts for their ability to inhibit TNF-alpha secretions and found that BT-201, an n-butanol extract of Panax notoginseng (Burk.) F. H. Chen (P. notoginseng) has such an ability. The purpose of this study has been to evaluate the anti-inflammatory and anti-rheumatic effects of BT-201. The anti-inflammatory effects were evaluated by measuring the effects of BT-201 on the production of TNF-alpha, interleukin (IL)-1beta, inducible nitric oxide (iNO), and matrix metalloproteinase-13 (MMP-13), in vitro. The anti-rheumatic effects were evaluated by treating mice with collagen-induced arthritis (CIA) using a daily oral administration of BT-201 at 15 mg/kg/day. In addition, the effects on NF-kappaB and mitogen-activated protein kinase (MAPK) pathways were evaluated by Western blotting using phospho-specific antibodies. BT-201 significantly inhibited all the inflammatory parameters evaluated in vitro and delayed the onset and progression of CIA. BT-201 inhibited the activation of NF-kappaB, ERK, p38, and JNK pathways. Our results demonstrated that BT-201 can modulate various aspects of inflammation in vitro and that it has disease-modifying, anti-rheumatic effects in vivo, suggesting that it can be a potential alternative to the current anti-TNF-alpha therapeutics for rheumatoid arthritis and other inflammatory disease.