The invention discloses a Chinese traditional medicine used for curing diarrhea of children, and a method for preparing the Chinese traditional medicine. In the method, tuckahoe, semen dolichoris album, dioscorea opposita thunb, coix seed, lotus seed, sanguisorba, plantain seed and coptis are cooked up according to the proportion by weight, and are pulverized into fine powder. Subsequently, ebony, balloonflower, licorice, fructus aurantii, white peony root, nutmeg, fructus amomi, costus root, and baikal skullcap root are decocted to concentrated solution according to the proportion by weight.Subsequently, the pulverized fine powder is mixed with the concentrated solution, and the mixture is stirred uniformly. The mixture is frozen and dried, and pulverized into fine powder, thus getting the Chinese traditional medicinal powder. The Chinese traditional medicine has the functions of reinforcing the spleen, strengthening the stomach, supplementing qi, relieving darrhea, clearing away heat and promoting diuresis, antiinflammation and analgesia, which is in particular applicable for curing diarrhoea of children, and is safe with stable performance and true curative effect without noxious and side effect. The operation is simple; the Chinese traditional medicine is administrated conveniently, and takes effect quickly with a short cure period.