The invention relates to the field of traditional Chinese medicines and discloses a traditional Chinese medicinal composition for treating diabetes and a preparation method thereof. The traditional Chinese medicinal composition for treating diabetes is prepared from the following raw materials in part by weight: 12 to 30 parts of astragalus, 3 to 5 parts of vine root, 18 to 30 parts of yam, 9 to 15 parts of anemarrhena asphodeloides bunge, 6 to 12 parts of mongolian snakegourd root, 4 to 6 parts of Chinese magnoliavine fruit and 3 to 5 parts of chicken's gizzardskin. The preparation method ofthe traditional Chinese medicinal composition comprises: leaching the astragalus, vine root and Chinese magnoliavine fruit with ethanol, filtering extract and collecting filtrate; leaching the yam, anemarrhena asphodeloides bunge and mongolian snakegourd root with water, filtering extract, condensing the filtrate, performing alcohol precipitation, filtering and collecting filtrate; and combining filtrate, drying, crushing, and mixing the crushed product with fine chicken's gizzardskin powder. The traditional Chinese medicinal composition for treating diabetes can relieve the symptoms of polydipsia, polyuria, polyphagia, emaciation, fatigue and weakness of diabetes, reduce blood sugar and treat diabetes of deficiency of Qi-Yin syndrome with urine sugar and blood sugar rise, and has remarkable treatment effect.