An Artemisia argyi cultivar, designated ‘Pyeong-an-ae’, was developed to enhance yield, lodging resistance, and functional compound content for medicinal use. The breeding objective was to select a high-yielding cultivar with improved agronomic performance and regional adaptability. The breeding material originated from an open-pollinated population of a collected accession (MPR-0506), and superior lines were selected through pedigree selection. Line AA1903 was selected for favorable growth traits and subsequently evaluated in yield and regional adaptation trials under the designation Y-MCD-007-1 in Eumseong-gun and Pyeongchang-gun, Korea. ‘Pyeong-an-ae’ exhibited an erect growth habit, thicker stems, and a larger leaf area than the control (Artemisia argyi landrace), resulting in enhanced lodging resistance and biomass production. The average dry leaf yield was 535 kg/10a, approximately two-fold higher than that of the control. The cultivar maintained relatively higher levels of eupatilin than the control before flowering. RAW264.7 macrophage-based bioactivity assays showed that the water extract exhibited lower cytotoxicity than the ethanol extract. Both extracts significantly inhibited LPS-induced nitric oxide production, with the ethanolic extracts exhibiting stronger inhibitory effects. ‘Pyeong-an-ae’ is vegetatively propagated and registered under Plant Variety Protection No. 398. Its superior agronomic traits, stable bioactive compound contents, and functional properties support its potential for commercial cultivation and medicinal applications.