Chronic inflammation can promote cancer development as observed in inflammation‐induced colorectal cancer (CRC). However, the poor treatment outcomes emphasize the need for effective treatment. Astragalus polysaccharide (APS), a vital component of the natural drug Astragalus, has anti-tumor effects by inhibiting cancer cell proliferation and enhancing immune function. In this study, we found that APS effectively suppressed CRC development through activating CD8⁺ T cells and reversing its inhibitory state in the tumor microenvironment (TME) of AOM/DSS inflammation‐induced CRC mice. Network pharmacology and clinical databases suggested that the STAT3/ Galectin-3(Gal-3)/LAG3 pathway might be APS's potential target for treating CRC and associated with CD8⁺ T cell dysfunction. In vivo experiments showed that APS significantly reduced phosphorylated STAT3 and Gal-3 levels in tumor cells, as well as LAG3 in CD8⁺ T cells. Co-culture experiments with MC38 and CD8⁺ T cells demonstrated that APS decreased the expression of co-inhibitory receptor LAG3 in CD8⁺ T cells by targeting STAT3/Gal-3 in MC38 cells. Mechanism investigations revealed that APS specifically improved CD8⁺ T cell function through modulation of the STAT3/Gal-3/LAG3 pathway to inhibit CRC development, providing insights for future clinical development of natural anti-tumor drugs and immunotherapies as a novel strategy combined with immune checkpoint inhibitors (ICIs).