The invention provides a traditional Chinese medicine for treating pathologic jaundice of neonate and a preparation method thereof. The raw material medicines of the traditional Chinese medicine comprise abrus cantoniensis hance, swertia mileensis, sweet wormwood, radix curcumae, sedum sarmentosum, conyza blinii, lysimachia christinae hance, oriental wormwood, rhizoma picrorhizae, jasmine, lagotisglauca, large-leaved gentian, pollen typhae, centella, sculellaria barbata, golden cypress, poria cocos, codonopsis pilosula, stigma croci, ligusticum wallichii, the root of Chinese pulsatilla and liquorice. Compared with treatment by western drugs, the traditional Chinese medicine has the advantages of remarkable clinical effect, small toxic and side effects, economy and easier operation.