The invention belongs to the technical field of medicines and relates to a traditional Chinese medicine composition for treating diabetes and a preparation method thereof. The traditional Chinese medicine composition for treating diabetes comprises 3-7 parts by weight of pseudo-ginseng, 1-5 parts by weight of cassia seeds, 4-8 parts by weight of mulberry leaves, 1-5 parts by weight of root of kudzu vine, 1-5 parts by weight of chrysanthemum, 4-8 parts by weight of hairyvein agrimony, 1-5 parts by weight of radix polygonati officinalis, 1-5 parts by weight of bark of eucommia, 1-5 parts by weight of tender leaves and stems of Laifeng Ampelopsis grossedentata, 1-5 parts by weight of radix astragali, 1-5 parts by weight of cornus officinalis, 1-5 parts by weight of wolfberry, 1-5 parts by weight of Chinese yam Ximaoshanyao and 3-7 parts by weight of root of moringa oleifera. Through traditional Chinese medicine ingredient compatibility, the traditional Chinese medicine composition can effectively activate inert insulin, reduce blood sugar, make inert insulin recover activity and normally participate in glycometabolism, improve human body blood sugar utilization and conversion, realize stable reduction of blood sugar, protect islet cells, inhibit insulin deficiency, inhibit insulin excessive secretion when insulin for glycometabolism is increased, relieve pancreas burden, realize pancreas necessary rest and reorganization, protect pancreas and inhibit islet failure.