Inhibition of microglia activation may provide therapeutic treatment for many neurodegenerative diseases. Astragaloside IV (ASI) with anti-inflammatory properties has been tested as a therapeutic drug in clinical trials of China. However, the mechanism of ASI inhibiting neuroinflammation is unknown. In this study, we showed that ASI inhibited microglia activation both in vivo and in vitro. It could enhance glucocorticoid receptor (GR)-luciferase activity and facilitate GR nuclear translocation in microglial cells. Molecular docking and TR-FRET GR competitive binding experiments demonstrated that ASI could bind to GR in spite of relative low affinity. Meanwhile, ASI modulated GR-mediated signaling pathway, including dephosphorylation of PI3K, Akt, I κB and NF κB, therefore, decreased downstream production of proinflammatory mediators. Suppression of microglial BV-2 activation by ASI was abrogated by GR inhibitor, RU486 or GR siRNA. Similarly, RU486 counteracted the alleviative effect of ASI on microgliosis and neuronal injury in vivo. Our findings demonstrated that ASI inhibited microglia activation at least partially by activating the glucocorticoid pathway, suggesting its possible therapeutic potential for neuroinflammation in neurological diseases.