AIF has been formulated using three herbs known to have anti-inflammatory and anti-osteolytic effects. In this study, the potential therapeutic effects of AIF for rheumatoid arthritis were assessed in vitro and in vivo. The effects of AIF on the inflammation (TNF-alpha, IL-1, iNO), cartilage protection (MMP-13), and selective killing of activated T cells were examined, in vitro. In addition, the therapeutic effect of AIF was evaluated using a collagen-induced arthritis (CIA) mouse model. DBA/1 mice were immunized with type II collagen. Following booster immunization, mice were treated with the oral administration of 276 mg/kg/d AIF once a day for 18 days, then, the severity of CIA was evaluated by macroscopic scoring and histopathological assessment. AIF significantly inhibited the production of TNF-alpha, IL-1, iNO, and MMP-13 in a dose dependent manner in vitro. Also, AIF killed activated T cells selectively, conserving naïve T cells. The oral administration of AIF in CIA mice suppressed the progression of CIA significantly and decreased synovial hyperplasia, cartilage destruction, and bone erosion. AIF showed potent anti-inflammatory effects in vitro and substantial protective effect for the progression of CIA in vivo. These results suggest that AIF contains effective compound(s) which may modify the progression of rheumatoid arthritis.