The invention discloses a traditional Chinese medicine for treating chronic colitis and a preparation method thereof. The traditional Chinese medicine is prepared from the following raw materials in parts by weight: 15 to 22 parts of tuber of dwarf lilyturf, 10 to 14 parts of morinda officinalis, 5 to 9 parts of rehmanniae radix, 6 to 12 parts of folium isatidis, 16 to 22 parts of licorice, 9 to 14 parts of alpinia oxyphylla, 4 to 9 parts of peach seed, 12 to 18 parts of dark plum, 6 to 11 parts of rabdosia rubescens, 3 to 6 parts of balloonflower root, 14 to 19 parts of broom cypress fruit, and 4 to 8 parts of leaf of eucalyptus robusta. The preparation method comprises the following steps: washing raw materials, cutting and drying raw materials, adding water into tuber of dwarf lilyturf, morinda officinalis, and the like, decocting tuber of dwarf lilyturf, morinda officinalis, and the like for three times, condensing the decoction, carrying out alcohol precipitation, drying the precipitate to obtain extract (A); adding ethanol into rabdosia rubescens, balloonflower root, and the like, performing reflux, drying to obtain extract (B); merging extract (A) and extract (B), grinding, and mixing. The provided traditional Chinese medicine can quickly relieve the clinical symptoms of ulcerative colitis patients such as diarrhea, pus and blood stool, stomachache, and the like; can prominently improve the pathological change of intestinal mucosa, eliminate the inflammation medium, and promote the healing of ulcer; and achieves a good curative effect. The total effective rate is 96%, and no adverse reaction, side effect, or toxic effect has been found.