Objective To investigate the clinical efficacy of modified Sangbaipi Decoction in the treatment of acute exacerbation of chronic obstructive pulmonary disease (AECOPD) with phlegm-heat obstructing the lungs and its effect on inflammatory indices. Methods A total of 60 AECOPD patients with phlegm-heat obstructing the lungs were randomly divided into two groups with 30 patients in each group according to the design of a randomized controlled trial. The patients in the control group were given conventional Western medicine treatment, and those in the control group were given oral Sangbaipi Decoction in addition to the conventional Western medicine treatment. The course of treatment was 10 days for both groups. The traditional Chinese medicine (TCM) syndrome score, serum levels of C-reactive protein (CRP) and procalcitonin (PCT), and clinical outcome were compared between the two groups. Results Both groups had significant reductions in the TCM syndrome score after treatment (P<0.05), and the treatment group had a significantly lower score than the control group (P<0.05). Both groups had significant improvements in the serum levels of CRP and PCT after treatment (P<0.05), and the treatment group had a significantly better improvement in the serum level of CRP compared with the control group (P<0.05). The treatment group had a significantly better clinical outcome than the control group (P<0.05). Conclusion In the treatment of AECOPD with phlegm-heat obstructing the lungs, Sangbaipi Decoction combined with conventional Western medicine treatment can significantly improve patients' clinical symptoms and reduce the serum levels of CRP and PCT and has a better clinical effect than Western medicine treatment alone.