Armillaria luteo-virens Sacc (ALS) is a rare wild Chinese medicinal and edible basidiomycete. However, its protective effect on intestinal functions and the underlying mechanism is still unknown. This work explored the improvement of dextran sulfate sodium (DSS)-induced colitis by ALS. ALS supplementation markedly improved colitis symptoms, gut barrier integrity, and goblet loss in DSS-treated mice. In addition, ALS inhibited colonic inflammation through the inhibition/activation of the mitogen-activated protein kinases/NF-κB signaling pathway. The 16S rRNA gene-based microbiota analysis revealed that ALS altered the gut microbiota composition, decreasing the richness of Enterobacteriaceae and increasing the abundance of Lactobacillaceae. The bile-acid-targeted metabolomic analysis showed that ALS recovered the microbial bile acid metabolism in the gut, enabling the activation of the farnesoid X receptor signaling by these acids, thus maintaining the intestinal homeostasis. Importantly, broad-spectrum antibiotic treatment reduced the efficacy of ALS-induced protection from colitis. Overall, our findings suggest that ALS may represent a novel approach in the nutritional intervention to prevent colitis.