The invention discloses a muscle and bone paste and a preparation method thereof. On the one hand, the muscle and bone paste comprises 56 medicaments such as vine root, East Asian tree fern rhizome, heracleum, divaricate saposhnikovia root, prepared common monkshood daughter root, ephedra herb, dragon's blood and the like; and on the other hand, the preparation method of the muscle and bone paste comprises the following steps of: crushing the dragon's blood in the muscle and bone paste into fine powder; fragmenting other 55 medicaments except the dragon's blood in the muscle and bone paste; mixing the medicaments with 4,000 to 6,000g of edible oil, and frying until the medicaments are dry; refining until drips are formed into beads; filtering and deslagging to obtain mixed liquor A; adding 2,000 to 2,500g of red lead into the mixed liquor A; stirring to obtain paste, and collecting the paste; and melting with soft fire, adding the dragon's blood powder, stirring uniformly, and spreading on cloth. The muscle and bone paste has effects of activating blood and dissolving stasis, clearing away heat and toxic materials, diminishing swelling and relieving pain, activating collateral flows and has good effects of treating cervical spondylosis, protrusion of lumbar vertebral discs, rheumatoid arthritis and the like caused by accumulated heat skin and joints, traumatic injuries, sacrodynia and hyperosteogeny.