Jiedu Huoxue Decoction (JHD), a recommended traditional prescription for patients with severe COVID-19, has appeared in the treatment protocols in China. Based on bioinformatics and computational chemistry methods, including molecular docking, molecular dynamics (MD) simulation, and Molecular Mechanics Generalized Born Surface Area (MM/GBSA) calculation, we aimed to reveal the mechanism of JHD in treating severe COVID-19. The compounds in JHD were obtained and screened on TCMSP, SwissADME, and ADMETLab platforms. The compound targets were obtained from TCMSP and STITCH, while COVID-19 targets were obtained from Genecards and NCBI. The protein-protein interaction network was constructed by using STRING. Gene Ontology (GO) and KEGG enrichment were performed with ClueGO and R language. AutoDock vina was employed for molecular docking. 100 ns MD simulation of the optimal docking complex was carried out with AmberTools 20. A total of 84 compounds and 29 potential targets of JHD for COVID-19 were collected. The key phytochemicals included quercetin, luteolin, β-sitosterol, puerarin, stigmasterol, kaempferol, and wogonin, which could regulate the immune system. The hub genes included IL6, IL10, VEGFA, IL1B, CCL2, HMOX1, DPP4, and ACE2. ACE2 and DPP4 were related to SARS-CoV-2 entering cells. GO and KEGG analysis showed that JHD could intervene in cytokine storm and endothelial proliferation and migration related to thrombosis. The molecular docking, 100 ns MD simulation, and MM/GBSA calculation confirmed that targets enriched in the COVID-19 pathway had high affinities with related compounds, and the conformations of the puerarin-ACE2, quercetin-EGFR, luteolin-EGFR, and quercetin-IL1B complexes were stable. In a word, JHD could treat COVID-19 by intervening in cytokine storm, thrombosis, and the entry of SARS-CoV-2, while regulating the immune system. These mechanisms were consistent with JHD's therapeutic concept of “detoxification” and “promoting blood circulation and removing blood stasis” in treating COVID-19. The research provides a theoretical basis for the development and application of JHD.