Disclosed is a Chinese medicinal preparation for treating liver disease and preparation method thereof, wherein the preparing process comprises steps of frying Cinnamomum cassia, banksia rose, areca-nut, atractylodes rhizome, pawpaw and pharbitis seed with vinegar, grinding into powders, roasting the germinated barley and grinding into powder, roasting green alum and disintegrating, roasting sandand disintegrating, mixing the obtained powders homogeneously, charging two times of water into oriental wormwood and grilling for one hour, filtering, deslagging, applying the Chinese medicinal powders by using the oriental wormwood grilling liquid.