The invention relates to the field of Chinese medicine preparations, in particular to a traditional Chinese medicine for preventing and treating rhagades and frostbite and a preparation method thereof. The traditional Chinese medicine comprises the following compositions:radix rehmanniae, Poterium sanguisorba, dried edible fungus, ginger, cinnamon, Chinese rhubarb, liquorice, safflower, radix angelicae, angelica, whole worms, clove, dried orange peel, Asarum sieboldi, honeylocust, apricot kernels, Brassica alba boiss, purslane, pangolin, galli stomachichum corium, fresh oriental arborvitae, balsamine roots, Momordica cochinchinensis, ebony, Chinese gall, calcined Dragon bones, Ardisia aberrans, lard, camphor, dragon blood, Glauber salt, borneol and wax. The traditional Chinese medicine has the advantages of readily available raw materials, low cost, easy acceptability to patients, good treatment effect and short treatment period.