The invention discloses a traditional Chinese medicine composition for preventing and treating skin diseases, and a preparation method thereof. The composition consists of radix sophorae falvescentis, fructus cnidii, wild chrysanthemum flower, menthol and borneol, and is prepared into an external preparation according to a certain proportion. The composition can be prepared into medicines and health-care products, such as external lotion, liniment, ointment, tincture, effervescent granules, effervescent tablets, external wet tissue, shower cream and the like. The preparation has the efficacies of clearing away heat and toxic material, dispelling wind and arresting itching, removing dampness and destroying parasites, and is mainly used for cutaneous pruritus, eczema, dermatitis, morbid leukorrhea and pruritus vulvae, mosquito bites and the like caused by damp-heat stagnation.