The invention provides a traditional Chinese medicine for treating vulvar leukoplakia and a preparation method thereof and belongs to the field of traditional Chinese medicine preparation techniques. The traditional Chinese medicine is prepared by using natural Chinese herbal medicines as raw material. The traditional Chinese medicine is characterized by comprising 30g of sophora flavescens, 30g of common cnidium fruit, 30g of rhizoma atractylodis, 20g of belvedere fruit, 20g of folium isatidis, 20g of astragalus membranaceus, 20g of blackberrylily rhizome, 20g of angelica, 20g of salvia miltiorrhiza, and 20g of schizonepeta. The preparation method includes: well mixing the Chinese herbal medicines according to a weight ratio, grinding into powder of 1-100 micrometers and packing with 10g per bag. Application of the traditional Chinese medicine includes: taking 10g to put into a cup, soaking with boiled water for 10 minutes, pouring into a basin, adding 1500ml warm water at 35-40 DEG C, hip bathing for 10-15 minutes, wetting gauze with the medicine for partial hot applying for 10-15 minutes, and slowly rubbing. The traditional Chinese medicine is applied 1-2 times a day for four weeks as a treatment course. Two treatment courses are needed to treat the vulvar leukoplakia. The traditional Chinese medicine for treating vulvar leukoplakia has the functions of clearing heat and itching relieving, promoting blood circulation to remove blood stasis and antisepsis and anti-inflammation; is convenient to prepare and use, lasting in medicine effect, free of side effects; and has rich raw material source, and is ideal therapeutic for treating vulvar leukoplakia.