Ethnopharmacological relevance: The Banxia-Houpu decoction (BHD), a renowned prescription documented in the Chinese medical book "The Synopsis of the Golden Chamber," has been proven to effectively mitigate inflammation within the central nervous system. Previous studies have demonstrated the efficacy of BHD in ameliorating symptoms in patients with obstructive sleep apnea (OSA). Nevertheless, the precise mechanisms and comprehensive effects of BHD on central system injury in OSA models have not been fully investigated. Aim of the study: To investigate whether BHD could inhibit neuroinflammation to decrease iron-induced neurotoxic injury in CIH mice. Materials and methods: C57BL/6N mice were divided into the Con, CIH, and BHD groups. Mice were exposed to CIH (21%-5% FiO2, 3 min/cycle, 8 h/d), and BHD was administered by gavage (3.51, 7.01, and 14.02 g/kg). The polarization of microglia, inflammatory factors, hepcidin, and brain iron levels were determined. Results: The administration of BHD at a dosage of 7.01 g/kg demonstrated a significant reduction in neurobehavioral abnormalities, neuronal damage, and degeneration caused by CIH. BHD exhibited the ability to inhibit the transition of microglial polarization from M2 to M1 by upregulating CD163 expression and downregulating iNOS levels. Furthermore, BHD decreased pro-inflammatory factor levels and increased antiinflammatory factor levels. Additionally, BHD was found to decrease hepcidin expression in astrocytes through the TLR4/MyD88/NF-kappa B signaling pathway. BHD reduced the total and neuronal iron levels by elevating FPN1 and reducing TfR1 levels. BHD exhibited positive effects on synapse and synaptic spine abnormalities, as well as an increase in the Bcl-2/Bax ratio, thereby mitigating neuronal damage induced by CIH. Conclusions: Based on these findings, BHD holds potential as a therapeutic intervention for neural damage injuries, which offers a theoretical foundation for the treatment of patients with OSA in clinical.