Objective To investigate the clinical effect of arthroscopic meniscus plasty combined with oral administration of Huoxue Lishui Decoction in the treatment of degenerative meniscus injury. Methods A total of 60 patients with degenerative meniscus injury were randomly divided into observation group and control group, with 30 patients in each group. All patients underwent arthroscopic meniscus plasty, and after surgery, the patients in the observation group were given oral administration of Huoxue Lishui Decoction, and those in the control group were given oral administration of celecoxib capsules. The course of treatment was 14 days for both groups. The patients were followed up for 6 months after surgery, and the two groups were compared in terms of Western Ontario McMaster University Osteoarthritis Index (WOMAC) score, Lequesne MG score, Visual Analogue Scale (VAS) score of joint pain, Lysholm score, Japanese Orthopaedic Association (JOA) score, and joint range of motion before treatment and at 2 weeks and 6 months after surgery. Results Both groups had significant improvements in WOMAC score, VAS score, Lysholm score, JOA score, Lequesne MG score, and joint range of motion after treatment (P<0.05). Compared with the control group at 2 weeks and 6 months after surgery, the observation group had significant improvements in WOMAC score, VAS score, Lysholm score, JOA score, and Lequesne MG score (P<0.05). At 2 weeks after surgery, the observation group had significantly better joint range of motion than the control group (P<0.05), while there was no significant difference in joint range of motion between the two groups at 6 months after surgery (P>0.05). Conclusion Meniscus plasty is an effective method for the treatment of degenerative meniscus injury, and Huoxue Lishui Decoction can significantly improve knee joint swelling and pain and promote the recovery of knee joint function after surgery.