Objective. To reveal the molecular mechanism of the antagonistic effect of traditional Chinese medicine Tianma formula (TF) on dementia including vascular dementia (VaD) and Alzheimer's disease (AD) and to provide a scientific basis for the study of traditional Chinese medicine for prevention and treatment of dementia. Method. The TF was derived from the concerted application of traditional Chinese medicine. We detected the pharmacological effect of TF in VaD rats. The molecular mechanism of TF was examined by APP/PS1 mice in vivo, Caenorhabditis elegans (C. elegans) in vitro, ELISA, pathological assay via HE staining, and transcriptome. Based on RNA-seq analysis in VaD rats, the differentially expressed genes (DEGs) were identified and then verified by quantitative PCR (qPCR) and ELISA. The molecular mechanisms of TF on dementia were further confirmed by network pharmacology and molecular docking finally. Results. The Morris water maze showed that TF could improve the cognitive memory function of the VaD rats. The ELISA and histological analysis suggested that TF could protect the hippocampus via reducing tau and IL-6 levels and increasing SYN expression. Meanwhile, it could protect the neurological function by alleviating A beta deposition in APP/PS1 mice and C. elegans. In the RNA-seq analysis, 3 sphingolipid metabolism pathway-related genes, ADORA3, FCER1G, and ACER2, and another 5 nerve-related genes in 45 key DEGs were identified, so it indicated that the protection mechanism of TF was mainly associated with the sphingolipid metabolism pathway. In the qPCR assay, compared with the model group, the mRNA expressions of the 8 genes mentioned above were upregulated, and these results were consistent with RNA-seq. The protein and mRNA levels of ACER2 were also upregulated. Also, the results of network pharmacology analysis and molecular docking were consistent with those of RNA-seq analysis. Conclusion. TF alleviates dementia by reducing A beta deposition via the ACER2-mediated sphingolipid signaling pathway.