The invention relates to a rheumatism and rheumatoid disease treating Chinese herb fumigation composition and a preparation method thereof. The rheumatism and rheumatoid disease treating Chinese herbfumigation composition is composed of raw materials comprising radix angelicae, caulis spatholobi, folium artemisiae argyi, notopterygium incisum, ephedra, lycopodium clavatum, schizophragma integrifolium, achyranthes bidentate, radix stephaniae tetarndrae, angelica sinensis, radix clematidis, cassia twig, homalomena occulta, fructus chaenomelis lagenariae, pueraria lobate, astragalus membranaceus, rhizoma atractylodis macrocephalae, eucalyptus globulus labill, fructus rosae laevigatae, liquorice, semen brassicae, peeled tripterygium wilfordii, bidens bipinnata, siegesbeckia orientalis and frankincense. The rheumatism and rheumatoid disease treating Chinese herb fumigation composition applies the Chinese herb collateral dredging fumigation technology researched and developed for years according to secrete prescription handed down from ancestors, is a fermented Chinese herb prescription capable naturally generating heat and biological energy, which is prepared on the basis of traditional Chinese herb fumigation and transdermal absorption and by innovating prescription recombination and matching with the biological fermentation technology of compound inoculation of bacillus subtilis,lactobacillus, saccharomycetes and the like, and can be effectively applied to treating diseases such as rheumatism, rheumatoid, lumbago or leg pain, uterine fibroid, dysmenorrhea, breast hyperplasia, scapulohumeral periarthritis, gout, sequela of apoplexy and hypertension.