A moisturizing, anti-wrinkle, and anti-allergic traditional Chinese medicine composition, and a preparation method thereof. Active components of the traditional Chinese medicine composition are water extracts of Dendrobium nobile, Viola tricolor, Ophiopogon japonicas, Tremella fuciformis, and an oat material. The oat material is oat grains, oat powder, or oat bran. A mass ratio of the Dendrobium nobile, Viola tricolor, Ophiopogon japonicas, Tremella fuciformis, and oat in the composition is 5-15: 2-10: 2-10: 1-5: 1-5, and is preferably 12: 6: 3: 2: 2. The composition of the Dendrobium nobile, Viola tricolor, Ophiopogon japonicas, oat material, and Tremella fuciformis is extracted and for external use. By retaining water, maintaining normal physiological functions of aquaporins, and other means, the composition not only achieves a moisturizing effect, but also achieves skin aging resisting, anti-allergic, and anti-crack efficacies.