The purpose of this study was to investigate the effects of Kyung Hee Allergic Disease Herbal Formula (KAHF) on atopic dermatitis (AD) and its mode of action. Our clinical study showed KAHF reduced Severity Scoring of Atopic Dermatitis (SCORAD) indexes and subjective symptom scores. In parallel, the decreased levels of interferon (IFN)-$gamma$ and interleukin (IL)-5 in serum, which contributed to its AD-mitigating effect was observed. To reveal the underlying mechanisms of KAHF in AD, its anti-inflammatory effect on lipopolysaccharide (LPS)-induced responses in RAW 264.7 cells was examined. KAHF was found to significantly inhibit the productions of nitric oxide (NO), prostaglandin $E_2$ ($PGE_2$), and IL-$1{eta}$ in LPS-stimulated RAW 264.7 macrophages. Consistently, KAHF potently inhibited protein and mRNA expressions of inducible nitric oxide synthase (iNOS) and cyclooxygenase-2 (COX-2). Furthermore, KAHF inhibited LPS-induced activation of nuclear factor (NF)-$kappa}B$. Taken together, our data suggest that KAHF has a beneficial effect on several eicosanoid-related skin inflammations, such as atopic dermatitis.