Herba Epimedii (yinyanghuo in Chinese) is a commonly used traditional Chinese medicine. Flavonoids are the major effective ingredient of Herba Epimedii, icariin is the most abundant component in Epimedium flavonoids, and icaritin is the metabolite of icariin. In the last decade, a number of studies on the pharmacological effects of Epimedium extracts have been conducted. Emerging evidence has shown that Epimedium flavonoids, especially icariin and its derivatives, have anti-inflammatory effects in the animal and cellular models on a variety of diseases related to chronic inflammation, including osteoporosis, osteoarthritis, neurological and psychiaric disorders, atherosclerosis, asthma and lung diseases, inflammatory bowel diseases, kidney diseases, skin diseases, autoimmune diseases, and cancer. The molecular mechanisms involved in anti-inflammation effects of icariin and its derivatives include reducing inflammatory cytokines, down-regulating NF-κB signaling, NLRP3/caspase-1/IL-1β axis, STAT signaling and MAPK pathway, as well as up-regulating Nrf2/ARE/HO-1 pathway and increasing glucocorticoid receptor and estrogen receptor signaling. In this review, we have updated the recent advances in this field, and these studies have suggested that Epimedii and its active compounds have potential to treat multiple diseases related to chronic inflammation.