The invention relates to a traditional Chinese medicine composition for treating diabetes and a preparation method thereof. The traditional Chinese medicine composition is prepared from the following traditional Chinese medicines in parts by weight: 20-45 parts of purslane, 1-8 parts of coptis, 5-25 parts of scrophulariaceae, 20-45 parts of radix trichosanthis, 5-25 parts of honeysuckle, 5-25 parts of puerariae, 5-25 parts of anemarrhena, 5-25 parts of dried rehmannia root, 5-25 parts of gypsum, 5-25 parts of codonopsis, 5-25 parts of atractylodes macrocephala, 5-25 parts of astragalus root, 5-25 parts of prepared rehmannia root, 5-25 parts of dogwood and 5-25 parts of yam. The traditional Chinese medicine composition has an obvious treatment effect on diabetes with the symptoms of polydipsia, polyphagia and bulimia, emaciation, frequent micturition with profuse urine, dizzy, pain in lumbus and legs, red tongue texture, little saliva and the like.