The invention relates to externally applied ointment for treating skin ulceration diseases and a preparation method thereof. The medicament is prepared from rosin, sesame oil, bees wax, frankincense powder, myrrh powder, Japanese ampelopsis root, bletilla, Indian iphigenia bulb, heartleaf houttuynia herb, lightyellow sophora root and densefruit pittany root-bark in a certain weight ratio. The preparation method for the medicament comprises the following steps: in the eleven Chinese medicinal herbs, soaking seven Chinese medicaments of the sesame oil, the Japanese ampelopsis root, the bletilla, the Indian iphigenia bulb, the heartleaf houttuynia herb, the lightyellow sophora root and the densefruit pittany root-bark in the ratio in a pan together at normal temperature, soaking for seven days if in winter, and soaking for three days if in summer; and then decocting the seven soaked Chinese medicaments with fire until decoction is slightly dry, removing dregs in the decoction for filtration, then putting the rosin and the bees wax in the ratio, after fully dissolving the rosin and the bees wax, removing the fire, putting the frankincense powder and the myrrh powder when the temperature is reduced to 40 DEG C, fully stirring, and cooling thoroughly into the ointment. The ointment has obvious curative effect on skin and flesh fester, skin and external diseases and virus infection caused by external injuries, diabetic foot induced by diabetes and other diseases.