Chronic atrophic gastritis (CAG) is a well-recognized precancerous condition for which effective pharmacological interventions remain limited. Qilianxiaopi Decoction (WW-1), a traditional Chinese medicine formula, has been widely used for gastric disorders and has shown potential anti-inflammatory and mucosal-protective effects. In this multicenter, randomized, double-blind, placebo-controlled trial with centralized blinded histological review, 468 patients with CAG were randomly assigned in a 2:1 ratio to receive WW-1 or placebo for 24 weeks, followed by a 24-week observation period. The primary endpoint was the change in histological gastric atrophy scores from baseline to week 48, assessed according to the updated Sydney system. Secondary outcomes included changes in intestinal metaplasia (IM), OLGA and OLGIM staging, serum pepsinogen levels, and markers of gastric mucosal barrier integrity. WW-1 significantly improved corpus GA at the end of treatment (OR=1.74, P = 0.016) and at follow-up (OR=1.75, P = 0.014). Significant improvement in corpus IM was observed at week 24 (OR=1.75, P = 0.013), with delayed benefits in the incisura angularis for both GA (OR=1.56, P = 0.034) and IM (OR=1.58, P = 0.026) at follow-up. WW-1 also improved OLGA staging (OR=1.54, P = 0.034). Adverse events were comparable between groups. The WW-1 group showed consistently higher serum PGI levels both post-treatment (median: 84.81 vs. 73.17 mu g/L, P = 0.009) and at follow-up (median: 85.92 vs. 82.76 mu g/L, P = 0.031), along with enhanced mucosal expression of E-cadherin, occludin, and ZO-1 (all P < 0.001). Compared with current Western medical strategies, which primarily rely on Helicobacter pylori eradication and surveillance but offer limited efficacy in reversing established atrophy or IM, WW-1 demonstrated a favorable balance of efficacy and safety, with its therapeutic benefits primarily observed in the gastric corpus and incisura angularis. This suggests its potential as a complementary therapeutic option for CAG.