Chronic obstructive pulmonary disease (COPD) is a major challenge to global public health. Evidence showed that long noncoding RNA (lncRNA)-XIST/microRNA (miRNA)-200c-3p axis regulated apoptosis and inflammation in cigarette smoke extract (CSE)-exposed human bronchial epithelial cells. Wenshen Yiqi granule (WSYQG) is a Traditional Chinese medicine compound prescription and often used for treating COPD. However, the current understanding of the mechanism by which WSYQG improves COPD is still limited, which has somewhat restrained its widespread application. Therefore, this study aims to investigate the effects and biological mechanisms of WSYQG on CSE-exposed type II alveolar epithelial (AEC II) cells with cell transfection and miRNA mimics/inhibitors intervention. Cell counting kit-8, flow cytometry, Transwell, Western blot, real-time quantitative reverse transcription PCR, and fluorescence in situ hybridization assays were used. Results showed that WSYQG intervention increased cell viability and decreased levels of IFN-γ, TNF-α and apoptosis, also preventing cell migration in CSE-exposed ACE II cells. Additionally, expression of epithelial marker (ZO-1), Notch1/4 decreased, and mesenchymal markers (vimentin) and Notch2 expression increased in CSE-exposed ACE II cells, while WSYQG intervention antagonized them and also decreased N-cadherin and increased E-cadherin. Silencing lncRNA-XIST enhanced WSYQG's effects on CSE-exposed ACE II cells, while inhibiting miR-200c-3p reversed silencing lncRNA-XIST's effects. Furthermore, dual-luciferase reporter assay system and RNA immunoprecipitation assay proved that lncRNA-XIST acts as a miR-200c-3p sponge. This study highlights the importance of the lncRNA-XIST/miR-200c-3p axis in WSYQG improving COPD, providing a research basis for WSYQG to improve COPD and expanding the possibility of expanding its clinical application.