Polycystic ovary syndrome (PCOS) is the most common endocrine and metabolic disorder prevalent in females of reproductive age; insulin resistance (IR) is the major pathogenic driver. Pharmacology is a basic option for PCOS therapy; traditional Chinese medicine (TCM), as a significant part of complementary and alternative medicine, has a long history in the clinical management of PCOS. Cangfudaotan decoction (CFD) has been used clinically for gynaecological diseases especially PCOS. In this study, first, chemical components in CFD were clarified using UPLC-Q/TOF-MS analysis. Then, an animal model of PCOS was established, granular cells were also isolated from the rats with PCOS, and CFD was administrated at different dosages in PCOS rats and granular cells, to investigate the therapeutic effect and mechanisms of CFD for PCOS treatment. The result showed that CFD treatment is effective in PCOS rats and granulosa cells. CFD was able to improve IR, restore the serum hormone levels, inhibit the inflammatory cytokines in PCOS rat, and alleviate ovary morphological injury and apoptosis in PCOS rats. In granulosa cells of PCOS, the result showed that the cell viability was improved, and cell apoptosis was inhibited after CFD administration. Further experiments suggested that CDF improves IR, follicular development, cell apoptosis, and inflammatory microenvironment, and this was associated to the regulation of IGF-1-PI3K/Akt-Bax/Bcl-2 pathway-mediated gene expression. Given that CFD sufficiently suppresses insulin resistance and improves follicular development in this study, exploring these mechanisms might help to optimize the therapeutic treatment of CFD in PCOS patients.