The invention discloses a traditional Chinese medicine for treating diabetic nephropathy. The traditional Chinese medicine is prepared from the following raw material medicines by weight: 30g of lagerstroemia indica, 15g of wine-processed rhizoma polygonati, 15g of prepared rehmannia root, 15g of salted morinda officinalis, 15g of wine-processed glossy privet fruit, 15g of herba epimedii, 20g of salvia miltiorrhiza, 10g of rhizoma anemarrhenae, 15g of safflower, 20g of radix achyranthis bidentatae, 20g of angelica sinensis, 20g of radix paeoniae rubra, 15g of fructus lycii, 12g of caulis spatholobi, 30g of astragalus membranaceus, 10g of red ginseng slices and 30g of fructus rosae laevigatae. The preparation method comprises the following steps: firstly, taking the astragalus membranaceus, the caulis spatholobi, the ladybell, the wine-processed rhizoma polygonati and the red paeony root by weight, adding water, decocting twice, adding 5 times of water for the first time, decocting for 1.5 hours, filtering, and collecting filtrate; adding 4 times of water into medicine residues, decocting for 1 hour, filtering, combining the two filtrates, and concentrating into a concentrated solution with the relative density of 1.10-1.15 (40 DEG C) for later use; the preparation method comprises the following steps: crushing fructus rosae laevigatae, prepared rehmannia root, wine-processed glossy privet fruit, herba epimedii, radix salviae miltiorrhizae, safflower, radix achyranthis bidentatae, angelica sinensis, salted morinda officinalis, rhizoma anemarrhenae, fructus lycii and red ginseng slices into fine powder, uniformly mixing, pelleting by using the concentrated solution, and drying to obtain the medicine.