Severe asthma is chronic airway disease, exhibit poor response to conventional asthma therapies. Growing evidence suggests that elevated hypoxia increases the severity of asthmatic inflammation among patient and model systems. In this study, we elucidate the therapeutic effect and mechanistic basis of Adhatoda Vasica (AV) aqueous extract on acute allergic as well as severe asthma subtypes, at physiological, histopathological and molecular levels using mouse models. We observed, oral administration of AV extract not only attenuates the increased airway resistance and inflammation in acute allergic asthmatic mice but also alleviates the molecular signatures of steroid (dexamethasone) resistance like IL-17A, KC and HIF-1α (hypoxia inducible factor-1alpha) in severe asthmatic mice. The reversal of pathophysiological features after AV treatment is associated with inhibition of elevated HIF-1α levels by restoring the expression of its negative regulator-PHD2 (prolyl hydroxylase domain-2). This was further confirmed in acute and severe asthma model developed by augmented hypoxic response. Further, AV treatment reverses cellular hypoxia- induced mitochondrial dysfunction in human bronchial epithelial cells - evident from bioenergetic profiles and morphological analysis of mitochondria. Involvement of hypoxia and mitochondrial dysfunction in asthma severity is being increasingly realised. Extract of AV although widely used in Ayurveda practice for the treatment of diverse respiratory ailments, including asthma, its molecular basis of action and effect on severe asthma subtype is still unclear. This study, demonstrates therapeutic mechanism of Adhatoda Vasica through hypoxia-induced mitochondrial dysfunction and highlights its potential in the treatment of severe steroid-resistant asthma.