The invention belongs to the field of tradition Chinese medicine, and relates to a traditional Chinese medicine composition containing folium artemisiae argyi and being capable of treating insomnia and a preparation method of the traditional Chinese medicine composition. The traditional Chinese medicine composition is prepared from the following raw materials in parts by weight: 15 to 23 parts of folium artemisiae argyi, 16 to 21 parts of spina date seed, 12 to 19 parts of amber, 10 to 17 parts of poria with hostwood, 13 to 17 parts of stem and leaf of thinleaf milkwort, 13 to 20 parts of arillus longan, 8 to 15 parts of ophiopogon root, 6 to 10 parts of Rhizoma Coptidis, 9 to 17 parts of Radix Platycodonis, 8 to 17 parts of lophatherum herb, 7 to 15 parts of cape jasmine, 6 to 11 parts of semen coicis and 7 to 12 parts of liquorice root. The traditional Chinese medicine composition provided by the invention has the efficacy of clearing liver to stop wind, tonifying Qi and relieving convulsion, nourishing the blood and tranquilization, soothing liver to smooth Qi and the like, has the effect of treating both manifestation and root cause of the disease on insomnia treatment, and is free of toxic and side effects.