The invention discloses a traditional Chinese medicine containing pseudo-ginseng powder and a preparation method thereof. The traditional Chinese medicine comprises, by mass, 60-100 parts of pseudo-ginseng powder, 20-30 parts of red sage root, 10-20 parts of licorice, 30-40 parts of radix rehmanniae, 15-25 parts of root of kudzu vine, 40-50 parts of radix astragali, 20-30 parts of bighead atractylodes rhizome, 60-80 parts of dextrin and 5-7 parts of powdered steatile. The traditional Chinese medicine utilizes pseudo-ginseng powder, red sage root and licorice as raw materials, does not contain hormones and antibiotics in Western medicines, and does not produce drug resistance. Natural plants adopted by the preparation method has no obvious toxic or side effects in research, have high safety, can be absorbed easily, can produce effects fast and are convenient for use. The traditional Chinese medicine can treat inner and outer hemorrhagic diseases such as a bleeding wound, blood stasis, gastrorrhagia and hematuria, has effects of expanding blood vessel, dissolving thrombus, improving microcirculation, preventing and treating cardiovascular and cerebrovascular diseases such as hyperlipidemia, cholesterol increasing, coronary heart disease, stenocardia and cerebral hemorrhage sequel, treating liver diseases such as fatty liver and liver fibrosis, and treating physical deficiency caused by hemorrhage, delivery and aeipathia, has a low cost and simple processes, and can be widely used.