The invention belongs to the field of pharmaceutical preparation, particularly discloses a traditional Chinese medicine composition for treating chronic atrophic gastritis and intestinal metaplasia and a preparation method and application thereof. The traditional Chinese medicine composition comprises the following raw materials: codonopsis pilosula, stir-fried rhizoma atractylodis macrocephalae, rhizoma pinellinae praeparata, poria cocos, pericarpium citri reticulatae, hedyotis diffusa, mica atba, rhizoma curcumae and radix curcumae; the preparation method comprises the steps of water extraction, alcohol precipitation, spray drying and addition of auxiliary materials, therefore various preparations are obtained, and the functions of invigorating spleen, supplementing qi, regulating qi-flowing for harmonizing stomach, and improving and resisting gastric mucosal atrophy and intestinal metaplasia are achieved, besides, the invention further discloses the application of the traditional Chinese medicine composition to preparation of drugs used for treating chronic atrophic gastritis and intestinal metaplasia.