Objective To observe the effect of Xiaoyao Powder on the improvement of liver fibrosis and iron metabolism in rats induced by chronic iron overload, and to explore the role and status of liver soothing, spleen strengthening and blood nourishing drugs in Xiaoyao Powder. Methods Rat liver fibrosis model induced by chronic iron overload was established by intraperitoneal injection of iron dextran(50 mg/kg/d) for 7 weeks. At the same time, the whole prescription of Xiaoyao Powder, or removing Liver Soothing drugs, spleen strengthening drugs, blood nourishing drugs and deferoxamine(DFO) were given daily by gavage. The levels of serum alanine aminotransferase(ALT), aspartate aminotransferase (AST), serum iron (SI) and ferritin (SF) were detected by automatic biochemical analyzer liver tissues were detected by histopathology, including HE staining, Masson staining, picric acid Sirius red staining, etc. immunohistochemistry was used to detect α-smooth muscle actin (α-SMA) and type I collagen protein (COL-1) expression. The content of liver iron in rat was detected by flame atomic absorption spectrometry. Results Compared with the control group, ALT and AST of liver function in the model group were significantly higher than those in the control group. The HE staining of pathological sections was consistent with the microscopic manifestations of liver fibrosis. The Ishak fibrosis score was significantly increased. Masson staining and picric acid Sirius red staining showed obvious collagen fiber deposition. Immunohistochemical results showed that the expression of α-SMA and COL-1 in liver tissue was significantly increased. Serum iron, ferritin and total liver iron were also significantly increased. Compared with the model group, the whole Xiaoyao powder recipe and its efficacy decomposed recipes could significantly reduce the ALT and AST of liver function, improve the pathological process, such as Ishak score and semi quantitative staining of collagen. The expressions of α-SMA and COL-1 in liver tissue were significantly decreased, and the contents of serum iron, ferritin and total liver iron were also significantly decreased. The results of positive control drug deferoxamine were similar to those of Xiaoyao Powder. Compared with the whole Xiaoyao Powder prescription, efficacy decomposed recipes in each group was significantly lower than that in the whole formula. Conclusion Xiaoyao Powder can significantly improve liver fibrosis induced by chronic iron overload in rats, and the drugs of soothing liver, strengthening spleen and nourishing blood have certain effects on improving iron overload and fibrosis. It is speculated that the effect of Xiaoyao Powder on inhibiting iron overload and maintaining iron homeostasis may be the core mechanism of its functions of soothing liver, strengthening spleen and nourishing blood.