Herbal or botanical supplements have multiple health benefits. Public interest in these supplements has increased greatly in recent years aimed at modulation of the immune system to combat immune-related diseases. Historically, Echinacea has long been used as phytotherapy for wound healing, pain relief and treatment of the common cold. Although the non-specific immunostimulating properties of Echinacea species have been widely investigated, academic knowledge of the adaptive immune-modulating activity, the anti-inflammatory activity and the mechanistic basis for these immunomodulatory properties remain elusive. In this dissertation, we focused our research interest in these less explored fields, with an emphasis on the herbal anti-inflammatory activity in both in vitro macrophage cell line and in vivo oral administration models. In vivo, alcohol extracts of Echinacea exhibited multiple immune-modulating effects. In addition to the non-specific, innate immunomodulation, they enhance B cell and T cell function (determined by increased production of antibodies and cytokines). These modulating effects of Echinacea were more robust when host immune functions were disturbed by mild stress. In vitro, alcohol extracts of Echinacea suppressed activated macrophages (RAW 264.7 cells) so they produced lower amounts of inflammatory mediators including nitric oxide (NO). The decreased NO production might be relative to decreased inducible nitric oxide synthase (iNOS) enzyme expression and increased arginase activity, suggesting that Echinacea could switch macrophage to alternate activation. In a cutaneous wound healing model, we demonstrated that alcohol extract of E. pallida helped improve restraint stress-delayed wound healing. These data provided novel evidence to support the multiple immunomodulatory properties of Echinacea and will help define the mechanisms behind the success of traditional use of Echinacea for pathogenic infections and inflammatory diseases.