The invention provides a traditional Chinese medicine composition for treating lipoma. The traditional Chinese medicine composition is prepared from the following main raw materials in parts by weight: radix bupleuri, dried tangerine peel, pinellia tuber, Indian buead, liquorice root, green tangerine peel, cape jasmine fruit, white mustard seed, tangerine pith, raw malt, raw fructus setariae germinatus, towel gourd vegetable sponge, arisaema with bile and villous amomum fruit. The invention provides a preparation method of the traditional Chinese medicine composition for treating lipoma. The traditional Chinese medicine composition is scientific and reasonable in formulation, has synergistic compatibility of components, can quickly give play to the effects and has the effects of relieving the depressed liver, eliminating phlegm and freeing channels and removing blood stasis and resolving static blood. Plenty of tests prove that the traditional Chinese medicine composition can activate human body dysfunction, has obvious curative effects on lipoma, has excellent and definite curative effects, gives consideration to both symptoms and root causes, is safe and convenient, does not have toxic or side effect and does not have any western medicine or hormone medicine component.