The invention relates to bone-setting plaster prepared by Chinese medicinal herbs, and a preparation method thereof. The bone-setting plaster is prepared by heating and cooking thirty-five Chinese medicinal herbs of erberry, clematis chinensis, typhonium giganteum, ledebouriella seseloides, original excrementum bombycis, and the like. The bone-setting plaster has the effects of blood stasis breakage and pain relief, detumescence, inflammation diminishing, bone reunion and channel dredging, no toxicity and side-effects, and the like, can eliminate the patient pain in the process of setting bones and shorten the recovery period. The bone-setting plaster is used for treating bone and joint organic diseases of diversified properties such as arthritis, scapulohumeral periarthritis, cervical spondylosis, hyperosteogeny, spur, and the like, of various properties, treating traumatic skin, skeleton, and vein pathological changes such as various injuries from falls, fractures, muscular constricture of veins, treating pathological changes from muscular strain such as back pains, muscle pains at neck and shoulder and the like, and is remarkably effective in treatment.