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Abstract Background SARS-CoV-2 infections caused mild-to-moderate illness. However, a sizable portion of infected people experience a rapid progression of hyper-inflammatory and hypoxic respiratory illness that necessitates an effective and safer remedy to combat COVID-19. Methods A total of 150 COVID-19-positive patients with no to mild symptoms, between the age groups 19–65 years were enrolled in this randomized, open-labeled three-armed clinical trial. Among them, 136 patients completed the study with RT-PCR negative reports. The patients received herbal drugs orally (Group A (Adhatoda vasica; AV; 500 mg; n = 50); Group B (Tinospora cordifolia; TC; 500 mg; n = 43), and Group C (AV + TC; 250 mg each; n = 43)) for 14 days. Clinical symptoms, vital parameters, and viral clearance were taken as primary outcomes, and biochemical, hematological parameters, cytokines, and biomarkers were evaluated at three time points as secondary outcomes. Results We found that the mean viral clearance time was 13.92 days (95% confidence interval [CI] 12.85–14.99) in Group A, 13.44 days (95% confidence interval [CI] 12.14–14.74) in Group B, and 11.86 days (95% confidence interval [CI] 10.62–13.11) days in Group C. Over a period of 14 days, the mean temperature in Groups A, and B significantly decreased linearly. In Group A, during the trial period, eosinophils, and PT/INR increased significantly, while monocytes, SGOT, globulin, serum ferritin, and HIF-1α, a marker of hypoxia reduced significantly. On the other hand, in Group B hsCRP decreased at mid-treatment. Eosinophil levels increased in Group C during the treatment, while MCP-3 levels were significantly reduced. Conclusions All the patients of the three-armed interventions recovered from COVID-19 and none of them reported any adverse effects from the drugs. Group C patients (AV + TC) resulted in a quicker viral clearance as compared to the other two groups. We provide the first clinical report of AV herbal extract acting as a modifier of HIF-1α in COVID-19 patients along with a reduction in levels of ferritin, VEGF, and PT/INR as the markers of hypoxia, inflammation, and thrombosis highlighting the potential use in progression stages, whereas the TC group showed immunomodulatory effects. Trial registration Clinical Trials Database -India (ICMR-NIMS), CTRI/2020/09/028043. Registered 24th September 2020, https://www.ctri.nic.in/Clinicaltrials/pdf_generate.php?trialid=47443&EncHid=&modid=&compid=%27,%2747443det%27 Graphical Abstract