The invention discloses a dressing composition used for inhibiting scars and accelerating wound healing and application thereof. The dressing composition consists of chitosan, acidic polysaccharide and panax notoginseng saponins in a weight proportion of 100:10-50:10-100, wherein the chitosan is selected from chitosan, chitosan lactate, acetate and hydrochloride; the acidic polysaccharide is selected from sodium carboxymethyl chitosan, sodium hyaluronate, zinc hyaluronate, sodium alginate and sodium carboxymethyl cellulose; and the panax notoginseng saponins accounts for no less than 40.0 percent of the total weight of ginsenosides Rg1 and Rb1. The formulations of the dressing composition are xerogel powder, capsules, gel membranes, hydrogels and fiber coatings. The dressing composition is used for wounds, burns, scalds, crush injuries, skin ulcers, gastroenteric ulcers and no healing of the wounds, has the advantages of rapid hemostasis, exudate reduction, moisturizing, air permeability, bacteriostasis, inflammation diminishing, itch relieving, no adhesion, effective inhibition of scarring, remarkable reduction of wound healing time and no need of replacing dressings, so that thedressing composition basically meets requirements of perfect functional external dressings.