The invention relates to a traditional Chinese medicine for treating knee joint effusion. The medicine is prepared from 50 to 100g of radix et rhizoma rohdeae japonicae, 15 to 30g of radix achyranthisbidentatae, 15 to 30g of cortex phellodendri, 60 to 80g of pearl barley, 15 to 30g of radix clematidis, 15 to 30g of obscured homalomena rhizome, 30 to 50g of suberect spatholobus stems, 20 to 40g ofradix angelicae sinensis, 12 to 30g of eupolyphaga and 15 to 30g of radix dipsaci asperoidis. The invention also provides a preparation method of the traditional Chinese medicine for treating the knee joint effusion. The traditional Chinese medicine for treating the knee joint effusion has the advantages that the cost is low; the use is convenient; the effects of relieving knee joint pain, eliminating effusion and the like can be achieved; the obvious curative effects are achieved on treatment of gonitis, knee osteoarthritis and the like; the effective rate is 93.3 percent; no toxic and sideeffects exist.