The invention relates to an oral traditional Chinese medicine for setting bones and relieving rigidity of muscles and a preparation method thereof. The medicine is prepared by the following Chinese medicine raw materials according to the parts by weight: 15-25 parts of wine-processed angelica, 15-25 parts of pseudo-ginseng, 15-25 parts of safflower, 5-15 parts of woodlouse, 5-15 parts of notopterygium incisium, 5-15 parts of vinegar-processed frankincense, 5-15 parts of vinegar-processed myrrh, 5-15 parts of pawpaw, 5-15 parts of elecampane, 5-15 parts of daemonorops draco, 5-15 parts of wine-processed fortune's drynaria rhizome, 5-15 parts of radix sileris, 5-15 parts of catechu, 5-15 parts of rehmanniae vaporata, 5-15 parts of dipsacales, 5-15 parts of tree peony bark, 5-15 parts of matured rheum officinale , 5-15 parts of vinegar-processed native copper, 5-15 parts of liquorice, 5-15 parts of sappan wood, and 5-15 parts of melon seeds. The medicine can dispel rheumatism, removes cold and cool, eliminates congestion, causes blood to be smooth, and increases the disease-resistant capability of body; in the addition, the medicine has the function of reunion of bone and releasing swelling analgesia; therefore, the medicine can greatly shorten the treatment time, has high cure rate and low recurrence rate.