The invention discloses a chitosan composition for preventing and treating diabetes and a preparation method of the chitosan composition. The preparation method comprises the following steps: extracting puerarin, radix rehmanniae recen, bitter gourd, astragalus membranaceus, polygonatum odoratum and ganoderma lucidum to prepare dry paste powder, mixing the dry paste powder with sieved chitosan and starch, granulating, filling capsules, polishing and packaging to prepare the chitosan composition for preventing and treating diabetes. In the formula of the chitosan composition disclosed by the invention, the chitosan can promote internal secretion by regulating organ functions to regulate the pancreatic function, improve the activity of islet cells, so as to promote increased insulin secretion; such traditional Chinese medicinal materials in the formula as the puerarin, the radix rehmanniae recen, the bitter gourd, the astragalus membranaceus and the ganoderma lucidum are dialectically used to ensure functions of nourishing yin, engendering liquid and allaying thirst, moistening dryness and tonifying qi, and cooperatively condition human body organ functions with the chitosan so as to effectively prevent and treat diabetes and complication.