The invention discloses an externally applied traditional Chinese medicine composition for treating rheumatic arthritis and a preparation method thereof, the externally applied traditional Chinese medicine composition comprises at least two layers of base cloth and an external dressing, a layer of heat conduction material is laid between every two adjacent layers of base cloth, and the external dressing is coated on the surface of the uppermost layer of base cloth; and the external dressing is prepared from notopterygium root, radix angelicae pubescentis, scorpion grass, large-leaved gentian,radix clematidis, caulis spatholobi, cassia twig, peach kernel, bighead atractylodes rhizome, radix paeoniae rubra, angelica sinensis and the like. The traditional Chinese medicine composition is reasonable in process design and proper in component proportion, the prepared traditional Chinese medicine composition needs to be used by assisting infrared rays, heat can be generated through the infrared rays in the using process, and therefore hot compress is conducted on joints, and arthralgia is relieved while the effect of the external dressing is improved; the external dressing combines the functions of clearing heat, dispersing blood stasis, resolving dampness, dispelling wind, promoting blood circulation and tonifying kidney, and can be used for effectively treating rheumatism or rheumatoid arthritis and other diseases.