The invention discloses an external plaster for treating bone erosion, osteomyelitis, bone impediment and rheumatism and a preparation method thereof. The external plaster is prepared from the following raw materials of angelica sinensis, dragon's blood, olibanum (prepared), myrrh (prepared), flos carthami, catechu, rehmannia, rhizoma bletillae, asarum, astragalus membranaceus, codonopsis pilosula, rhizoma drynariae, teasel root, salvia miltiorrhiza, eupolyphaga, rehmannia glutinosa, notopterygium root, divaricate saposhnikovia root, radix angelicae pubescentis, scorpion, radix gentianae macrophyllae, divaricate saposhnikovia root, eucommia ulmoides, cassia twig, pangolin, cinnamon, ligusticum wallichii, agkistrodon halys, lycopodium clavatum, scorpion, pseudo-ginseng, parasitic loranthus, rhizoma corydalis, radix aconiti lateralis praeparata slice, radix clematidis, sesame oil and red lead 2; and the raw materials are crushed, decocted, added with oil to collect paste, and spread on cotton cloth after hot melting. Through local and acupoint application, the external plaster has the effects of promoting blood circulation to remove blood stasis, dredging channels and collaterals, reducing swelling and resolving mass, regulating qi to alleviate pain, dispelling wind and eliminating dampness, and dispelling cold and activating collaterals, has a good treatment effect on femoral head necrosis, osteomyelitis, ankylosing spondylitis, bone ununion, rheumatism, rheumatoid, lumbar disc herniation, cervical spondylosis, gonitis and hyperostosis, and has no toxic or side effect.