Natural Killer (NK) cell is the first batch of re-constructed cell populations after allogeneic hematopoietic stem cell transplantation (allo-HSCT), and its delayed reconstitution inevitably causes poor outcome. The traditional Chinese medicine Huiyang-Guben decoction (HYGB) has been clinically used in patients undergoing allo-HSCT, but its effect on NK cell reconstruction is still unclear. 40 patients with allo-HSCT therapy were randomly divided into the control group and the HYGB group, and were given oral administration of normal saline or HYGB for 4 weeks before allo-HSCT, respectively. NK cells were cultured and treated with transforming growth factor beta (TGF-beta) and HYGB in vitro, and cell viability, cell apoptosis, and the function of NK cells were evaluated. Functional verification experiments were performed by knocking down signal transduction molecule 7 (Smad7) in NK cells before TGF-beta and HYGB treatment. Clinical data suggested that HYGB intervention decreased the incidence of acute graft-versus-host disease after allo-HSCT, and increased the proportion of NK cell population. Meanwhile, HYGB improved cell viability, restrained apoptotic cell death, and enhanced cell killing activity of NK cells in patients with allo-HSCT. Notably, we found that HYGB significantly increased the expression level of Smad7 and the phosphorylation level of signal transducer and activator of transcription 3 (Stat3) in NK cells from patients with allo-HSCT. Moreover, HYGB alleviated TGF-beta-induced NK cell impairment and re-activated the Smad7/Stat3 signaling in vitro, while silencing Smad7 reversed the protective effect of HYGB on TGF-beta-treated NK cells. HYGB promotes NK cell reconstruction and improves NK cell function after allo-HSCT through activating the Smad7/Stat3 signaling pathway.