The invention relates to a Chinese medicine with the functions of eliminating lipid and removing heat from the liver and a preparation method thereof. The Chinese medicine is a preparation prepared by giant knotweed, hawthorn, rhubarb, herba artemisiae capillaris and radix bupleuri in proportion. The preparation method is as follows: 1) giant knotweed, hawthorn and rhubarb are taken and extracted with ethanol in a fractionated manner, the extract is merged, the dreg mixture of the three raw materials is separated out by filtering, and after ethanol is recovered, the filtrate is concentrated into the thick extract of the three raw materials; 2) herba artemisiae capillaris and radix bupleuri are taken and merged with the dreg mixture and decocted with distilled water in a fractionated way, decoction is merged and filtered, and the obtained filtrate is concentrated into the thick extract of the five raw materials: 3) the thick extract of the three raw materials and the thick extract of the five raw materials are merged, treated with spray drying, pulverized into fine powder and prepared into pulvis, granules, tablets or capsules. The Chinese medicine can alleviate hyperlipaemia, reduce fat accumulation in the liver and fatty degeneratiaon degree, protect liver function and maintain energy equilibrium of the body, and has the advantages of definite curative effect, few toxic and side effects and safe and reliable performance.