Background. Administration of nonsteroidal anti-inflammatory drugs (NSAIDs) often causes small intestinal ulcers in patients, but few effective drugs are currently available to manage such serious adverse events of NSAIDs. Li-Zhong decoction (LZD), a well-known traditional Chinese medicine (TCM) formula, is commonly prescribed for treatment of gastrointestinal diseases. The present study aimed to investigate the anti-ulcerogenic activity of LZD on indomethacin- (IND-) induced duodenal ulcer in rats. Mechanistic studies of action of LZD were focused on involvement of TLR-2/MyD88 signaling pathway. Methods. Fifty male Sprague-Dawley (SD) rats were randomly and evenly divided into five groups: normal control, ulcer control (IND, 25 mg/kg), IND + esomeprazole (ESO, 4.17 mg/kg), and IND + low and high doses of LZD (3.75 and 7.50 g/kg). Macroscopic and histopathological examinations were performed for evaluation of ulcer index (UI), curative index (CI), and microscopic score (MS). Levels of duodenal inflammatory biomarkers and cytoprotective mediators including interleukin-4 (IL-4), IL-10, tumor necrosis factor-α (TNF-α), and prostaglandin E2 (PGE2) were measured by ELISA. Expression levels of TLR-2 and MyD88 mRNA were assessed by qRT-PCR. The expression and distribution of TLR-2 and MyD88 proteins were analyzed by western blot and immunohistochemistry, respectively. Results. Gross and microscopic examinations of the IND-treated rats revealed severe duodenal hemorrhagic necrosis, inflammatory infiltration, villus destruction, and crypt abscess, while LZD-treated rats manifested these pathological events to a markedly lesser degree. LZD significantly decreased UI and MS, increased CI, preserved the integrity of the villus and crypt, and normalized the tissue architecture of the duodenum of rats. The elevated TNF-α levels in the IND-treated rats were markedly diminished in the LZD-treated rats, while lower levels of IL-4, IL-10, and PGE2 observed in IND-treated rats were significantly increased in LZD-treated rats. Interestingly, improvement of immune function in duodenal mucosa by reduction of mRNA and protein expression levels of TLR-2 and MyD88 was also observed in rats treated with LZD. Consistently, immunohistochemical analyses revealed a lower co-localization of TLR-2 and MyD88 proteins in the duodenal mucosa of LZD-treated rats as compared to the IND-induced rats. Conclusions. Our data demonstrate that LZD protects the duodenal mucosa from IND-caused lesions, which is at least partially attributable to the interaction of its potential cytoprotective and anti-inflammatory mechanisms together with enhancement of the mucosal immunity through TLR-2/MyD88 signaling pathway.