The invention provides a traditional Chinese medicine composition for treating diabetes and a preparation method thereof. The traditional Chinese medicine composition for treating diabetes has the advantages of obvious effect and small toxic or side effect, has the functions of preventing, controlling, relieving and curing diabetes, and can prevent the generation and development of diabetes complications. The traditional Chinese medicine composition for treating diabetes is characterized by comprising 2-8g of ginseng, 6-15g of radix astragali, 4-10g of cornel, 2-6% of angelica, 4-9g of wolfberry fruit, 8-10g of kudzu root, 4-8g of polygonatum, 2-8g of pupae, 30-50g of balsam pear and 1-6g of licorice root. The preparation method is characterized by comprising the following steps: extracting volatile oil from angelica, and extracting ginseng with alcohol; merging decoction dregs of angelica and ginseng with radix astragali, cornel, wolfberry fruit, kudzu root, polygonatum, pupae, balsam pear and licorice root; adding 10 times of water, extracting twice (two hours a time), and filtering; merging the two filtrates; concentrating the merged filtrate under reduced pressure at 60 DEG C until the relative density reaches about 1.15-1.20, adding 3 times of 75% ethanol, standing for 24 hours, and taking the supernatant for later use; drying the supernatant, and screening; and taking the undersize, mixing with the volatile oil of angelica for 30 minutes, granulating by a dry process, and finishing the granules.