The invention discloses a spleen and stomach reconciling and turbid reducing sugar pill for treating phlegm-turbid obstruction syndrome of type 2 diabetes and a preparation method thereof. The sugar pill comprises 270-290 g of Alisma, 260-275 g of Polyporus umbellate, 260-275 g of poria cocos, 15-25 g of raw licorice, 260-275 g of fried Atractylodes, 260 g of fried Rhizoma Atractylodis Macrocephalae, 90 g of citrus chachiensis hortorum, 120 g of Sichuan Mangnolia officinalis, 60 g of Sichuan cassia twig and 10-20 g of ginger slice. The medicines Alisma, Polyporus umbellate, poria cocos and licorice are put into an oven for drying, and then are uniformly mixed and pulverized into fine powder for after use; and water is added to the medicines fried Atractylodes, fried Rhizoma Atractylodis Macrocephalae, citrus chachiensis hortorum, Sichuan Mangnolia officinalis, Sichuan cassia twig and ginger slice for boiling for three times, the decoction is combined and filtered, the filtrate is concentrated to clear paste, and the clear paste is mixed with fine powder and then extruded into pellets, and polishing and drying are carried out. The spleen and stomach reconciling and turbid reducing sugar pill significantly improve the clinical symptoms of the patients with T2DM phlegm-turbid obstruction syndrome, improve the disorder of glucose and lipid metabolism, improve the islet function, reduce the insulin resistance and reduce the glucagon and blood sugar fluctuation degrees, and does not cause any toxic and side effects during clinical observation.