The invention relates to an externally-applied traditional Chinese medicine for treating arthritis, which comprises the following components in part by weight: 1 to 3 parts of common monkshood mother root, 1 to 3 parts of kusnezoff monkshood root, 4 to 8 parts of angelica dahurica, 4 to 6 parts of incised notopterygium rhizome, 3 to 7 parts of pubescent angelica root, 1 to 3 parts of manchurian wildginger, 2 to 4 parts of szechuan lovage rhizome, 2 to 4 parts of cassia twig, 0.5 to 0.9 part of clematis root, 0.4 to 0.8 part of common clubmoss herb and 0.3 to 0.7 part of garden balsam stem. A preparation method comprises the following steps of: mixing the components according to the ratio, decocting in water, filtering dregs of decoction and extracting solution for three times, and mixing the obtained liquid medicine for three times uniformly for later use. Before each time of use, the externally-applied traditional Chinese medicine is heated, and after being fumed by the heated externally-applied traditional Chinese medicine, painful joints are immersed and washed for at least twice in a day. The externally-applied traditional Chinese medicine has wide raw material sources and scientific and reasonable formula, can act on a lesion site directly, can be widely used for treating rheumatic arthritis, osteoarthritis and rheumatoid arthritis, and has the characteristics of simple using method, no toxic or side effect and obvious effect.