To further develop the tree peony (Paeonia ostii) industry, methods for reusing the peony pods were explored, which are only used as low-value firewood. In the study, pods were subjected to alkaline pretreatment to produce fermentable reducing sugar for polyhydroxybutyrate (PHB) production. Fourier transform infrared (FTIR) results and reducing sugar yields for samples subjected to alkaline pretreatment were better than those for untreated samples, and the reducing sugar yield increased by 27.15%. The degree of hydrolysis and reducing sugar yield were increased by optimizing enzymatic parameters. The produced reducing sugar had carbon and nitrogen content of 31.69% and 0.095%, respectively, and most carbon came from glucose and xylose. The reducing sugar was fermented using a recombinant Escherichia coli strain, and the product was confirmed to be PHB by FTIR and proton nuclear magnetic resonance (1H NMR) analyses. The PHB yield increased by 36.67% when the produced reducing sugar, instead of glucose, was used as the carbon source. Meanwhile, corn steep liquor increased PHB production more significantly than the other tested nitrogen sources. The results of the study can promote the further development of the tree peony industry for commercial biodegradable PHB production by providing economical biomass.