The plant extract "total glucosides of peony" (TGP) constitutes a mixture of glycosides that is isolated from the roots of the well-known traditional Chinese herb Paeonia lactiflora Pall. Paeoniflorin (Pae) is the most abundant component and the main biologically active ingredient of TGP. Pharmacologically, Pae exhibits powerful anti-inflammatory and immune regulatory effects in some animal models of autoimmune diseases including Rheumatoid Arthritis (RA) and Systemic Lupus Erythematosus (SLE). Recently, we modified Pae with an addition of benzene sulfonate to achieve better bioavailability and higher anti-inflammatory immune regulatory effects. This review summarizes the pharmacological activities of Pae and the novel anti-inflammatory and immunomodulatory agent Paeoniflorin-6'-O-benzenesulfonate (CP-25) in various chronic inflammatory and autoimmune disorders. The regulatory effects of Pae and CP-25 make them promising agents for other related diseases, which require extensive investigation in the future.