〔Abstract〕 Objective To analyze the effects of Xianling Gubao Capsule combined with diacerein on nitric oxide (NO) and granulocyte-macrophage colony-stimulating factor (GM-CSF) in the treatment of lumbar osteoarthritis in middle-aged and elderly patients. Methods A total of 80 middle-aged and elderly patients with lumbar osteoarthritis who were admitted to Wuwei Traditional Chinese Medicine Hospital from December 2020 to September 2022 were selected and randomly divided into a control group and an observation group, with 40 cases in each group. The control group was treated with oral diacerein alone, while the observation group was additionally treated with Xianling Gubao Capsule on the basis of the control group. The spinal function, pain level, the levels of NO and GM-CSF, and overall treatment effect were compared between the two groups. Results After one month of treatment, the Japanese Orthopaedic Association (JOA) score of the observation group was higher than that of the control group, and the visual analogue scales (VAS) score was lower than that of the control group, with statistically significant differences (P < 0.05). After treatment, the serum levels of NO and GM-CSF in the observation group were lower than those in the control group, with statistically significant differences (P < 0.05). The total effective rate of the observation group was higher than that of the control group, with a statistically significant difference (P < 0.05). Conclusion In the clinical treatment of lumbar osteoarthritis in middle-aged and elderly patients, the medication regimen of Xianling Gubao Capsule combined with diacerein can effectively control the body’s inflammatory response, promote the improvement of lumbar function, and alleviate pain.