Abstract：Objective：To observe the therapeutic effect of modified Wendan Decoction on insomnia of internal obstruction of phlegm-damp type and its effect on the levels of 5-hydroxytryptamine (5-HT) and glutamic acid (Glu) in serum. Methods：A total of 100 cases of patients with insomnia were divided into the western medicine group and the Chinese medicine group according to the random number table method， with 50 cases in each group. The western medicine group was treated with Esazolam Tablets， and the Chinese medicine group was treated with modified Wendan Decoction. The clinical effects and adverse reactions were compared between the two groups； the traditional Chinese medicine (TCM) syndrome scores， Pittsburgh Sleep Quality Index (PSQI) scores and the levels of 5-HT， dopamine (DA) and Glu in serum before and after treatment were compared between the two groups. Results： The total effective rate was 88.00% in the Chinese medicine group，higher than that of 72.00% in the western medicine group (P＜0.05). After treatment， the scores of TCM syndromes such as sleep disturbance， vexation， chest oppression，gastric stuffiness，excessive phlegm，dizziness，vertigo，and bitter taste in the mouth were all decreased in the two groups (P＜0.05)，and the above scores in the Chinese medicine group were lower than those in the western medicine group (P＜0.05). After treatment， the scores of PSQI such as sleep time，sleep quality，sleep disturbance，time for falling asleep，daytime dysfunction，sleep efficiency and sleep medication were all decreased in the two groups (P＜0.05)， and the above scores in the Chinese medicine group were lower than those in the western medicine group (P＜0.05). After treatment，the levels of 5-HT and Glu in serum in the two groups were elevated (P＜0.05)， and the levels in the Chinese medicine group were higher than those in the western medicine group (P＜0.05)；the DA levels in the two groups were decreased (P＜0.05)，and the level in the Chinese medicine group was lower than that in the western medicine group (P＜0.05). The incidence of adverse reactions was 6.00% in the Chinese medicine group，lower than that of 20.00% in the western medicine group (P＜0.05). Conclusion：Modified Wendan Decoction has an ideal effect in treating insomnia of internal obstruction of phlegm-damp type，which can effectively relieve clinical symptoms，improve sleep quality，regulate the levels of 5-HT and Glu in serum， and reduce adverse reactions.