Keloids are fibroproliferative diseases featuring abnormal fibroblast proliferation and extracellular matrix (ECM) deposition. Current therapeutic methods for keloids are unsatisfactory, and the recurrence rates of keloids are high. Astragaloside IV (AS-IV) is a key active component of Astragalus membranaceus Bunge, and has been reported to exert potent anti-fibrotic effects. Accordingly, our research aimed to explore whether AS-IV suppresses fibroblast dysfunction and skin fibrosis during the development of keloids. Human keloid-derived fibroblasts (KFs) were stimulated by TGF-β1 to evaluate the influence of AS-IV on abnormal proliferation, migration, and accumulation of ECM in vitro. A bleomycin (BLM)-induced skin fibrosis model was established to assess the influence of AS-IV on ECM deposition and skin fibrosis in vivo. TGF-β1 stimulation enhanced the proliferation, migration, and accumulation of ECM in KFs, which were abolished by AS-IV treatment. The in vivo assay revealed that AS-IV administration restrained ECM accumulation and skin fibrosis in mouse models. AS-IV plays an anti-fibrotic role in keloids by suppressing fibroblast dysfunction and reducing ECM deposition.