The present invention pertains to the field of pharmaceutical technology, which discloses a drug for treating chronic atrophic gastritis and the preparation method. The drug is prepared by common yam rhizome, medicated leaven, white paeony root, tangerine peel and liquoric root, or common yam rhizome, medicated leaven, white paeony root, tangerine peel, Mongolian snakegourd root, fragrant solomonseal rhizome and liquoric root according to certain mix ratio by weight. The present invention can be made into any formulation which is acceptable clinically or on the pharmacy, while the oral preparation is preferential. The drug has the effects of nourishing yin, nourishing stomach, regulating qi and stopping pain, and has significant effects for the treatment of chronic atrophic gastritis.