Background: Inflammation plays an important role in polycystic kidney disease (PKD). Cordyceps sinensis, a prized Chinese medicinal herb, exerts anti-tumor, anti-inflammatory and anti-metastatic effects and benefits patients with kidney diseases. The aim of this study was to test the efficacy of FTY720, an immunosuppressant derived from C. sinensis, in a rat cystic kidney disease model, and explore its underlining mechanism. Methods: Male wild type and Cy/+ Han:SPRD rats were treated with FTY720 at 3 and 10 mg/kg/day for 5 weeks and 12 weeks by gavage. Blood and kidney were collected for functional, morphological, RNA, and protein analysis. Results: Inflammation is activated in Cy/+ Han:SPRD rats. Inflammatory cytokines including interleukin 6 and tumor necrosis factor alpha were upregulated and inflammation-related pathways were activated, such as nuclear factor κB and signal transducer and activator of transcription 3 (STAT3) pathways. Furthermore, the bioactive sphingolipid mediator sphingosine-1-phosphate (S1P), a regulator of inflammation, was accumulated in the Cy/+ Han:SPRD rats. FTY720 significantly reduced cyst growth and delayed disease progression by reducing the accumulation of S1P, thereby inhibiting inflammatory responses. Conclusion: FTY720 treatment reduced the expression of inflammatory cytokines and attenuated the activation of NK-κB and STAT3 pathways in Cy/+ Han:SPRD rats. It suggests that FTY720 may serve as a therapeutic agent for clinical autosomal dominant PKD treatment.