Background and Purpose Cordyceps is a widely used traditional Chinese medicine due to its many health benefits, such as immune regulation. As Cordyceps’ major component, polysaccharides are of great attention serving as a potential drug or vaccine with nontoxicity. However, little is known about the underlying immunomodulatory mechanism of Cordyceps caterpillar polysaccharide (CCP). In this present study, we investigated the immunomodulatory effects of CCP on macrophages in vitro and in vivo and its underlying mechanism. Experimental Approach Macrophage cell line RAW 264.7 cells, bone marrow-derived macrophages (BMDMs), wild-type, and gene-deficient (TLR2-/- and TLR4-/-) mice were used in the study. Using a series of molecular biology methods, we identified the direct target of CCP on macrophage and the downstream signaling pathways. Besides, using in vivo animal studies, we examined and confirmed the effects of CCP on macrophages. Key results CCP could trigger TNF-α and IL-6 production of macrophages by targeting toll-like receptor 4 (TLR4). The CCP-induced TLR4-downstream is the MyD88/p38 signaling pathway. The immune-regulation of CCP on macrophages was not detected in TLR4-deficient mice. Conclusion and Implications The TLR4/MyD88/p38 signaling pathway plays a crucial role in the immune regulation of Cordyceps on the innate immune, which offers a better understanding of polysaccharide-based dietary and medicinal benefits and provides a scientific foundation for Cordyceps’ application.