The invention discloses a traditional Chinese medicine composition for treating intractable insomnia and a preparation method thereof and belongs to the field of traditional Chinese medicines. The composition comprises the following raw materials in parts by weight: 15-25 parts of radix rehmanniae preparata, 7-12 parts of donkey-hide gelatin, 6-10 parts of coptis chinensis, 5-8 parts of radix scutellariae, 3-5 parts of cinnamon, 10-20 parts of stir-fried spina date seeds, 8-15 parts of cortex albiziae, 8-10 parts of radix bupleuri, 6-10 parts of fructus aurantii, 6-10 parts of tabasheer, 8-10 parts of stiff silkworms, 10-20 parts of vinegar turtle shell, 10-20 parts of tortoise plastron stir-baked with vinegar, 10-20 parts of calcined oyster shell and 6-15 parts of radix cudramiae. The composition has the efficacies of soothing the liver, dispelling melancholy, soothing the nerves, tonifying kidney yin, reducing ministerial fire, reducing phlegm, eliminating stagnation and removing blood stasis, is suitable for treating intractable insomnia with various syndromes such as kidney yin deficiency, liver qi and damp-heat stagnation and phlegm-heat stagnation.