The invention relates to a traditional Chinese medicine preparation, in particular to a traditional Chinese medicine composition for treating diabetes and a preparation method. The traditional Chinese medicine composition is characterized by being prepared from the following raw materials of traditional Chinese medicines proportioning by weight: 10-20 parts of Hairyvein Agrimonia Herb and Bud, 10-15 parts of radix codonopsis pilosulae, 3-12 parts of donkey-hide gelatin, 10-20 parts of schisandra fruit, 3-15 parts of yam, 2-5 parts of radix notoginseng powder, 10-30 parts of tuber of dwarf lilyturf, 10-50 parts of raw gypsum and 10-30 parts of rhizoma anemarrhenae. The preparation method comprises the following steps: weighing the raw materials according to the weight ratio, pulverizing into fine powder after taking the radix codonopsis pilosulae, the donkey-hide gelatin and the raw gypsum and mixing, and filtering by a filter screen of 100 meshes to obtain mixed powder; then, taking the Hairyvein Agrimonia Herb and Bud, the schisandra fruit, the yam, the tuber of dwarf lilyturf and the rhizoma anemarrhenae, adding water, decocting twice, decocting for 1.5 hours each time, filtering by times, merging filtrate, heating to the temperature of 50-70 DEG C and concentrating into a thick paste with the relative density of 1.10-1.30; and finally, mixing the obtained thick paste and the mixed powder, drying, pulverizing, adding the radix notoginseng powder, mixing evenly, granulating, drying and subpackaging so as to obtain the traditional Chinese medicine composition. The traditional Chinese medicine composition prepared by the invention has definite medicine effect, no side effect, low price and feasible process of the preparation method.