The invention discloses an ointment with effects of diminishing inflammation and relieving pain and a preparation method thereof. The preparation method comprises the following steps: 1, mixing and grinding salvia miltiorrhiza, ligusticum wallichii, panax notoginseng, coptis chinensis and astragalus, soaking, performing reflux heating, and filtering to obtain traditional Chinese medicine extract I; 2, decocting, filtering and concentrating wormwood and lonicera japonica to obtain water extract II; 3, grinding and juicing leek, and filtering to prepare ester extract III; 4, mixing and concentrating the traditional Chinese medicine extract I, the water extract II and the ester extract III to prepare a concentrated solution; 5, grinding Chinese chestnut and lotus seed into powder so as to obtain mixed powder IV; 6, mixing honey, mixed powder IV and the concentrated solution to prepare emulsion V; 7, mixing vaseline, aloe vera gel and the emulsion V to prepare the ointment with effects ofdiminishing inflammation and relieving pain; 8, performing high pressure homogenization, and packaging with aluminum sheet, thereby obtaining the finished product. The ointment with effects of diminishing inflammation and relieving pain prepared by the preparation method disclosed by the invention is specially prepared for ventilation, has soothing and recovering effects on pain and discomfort caused to each part of the human body, can achieve the effects of plaster and oral painkillers, and can also overcome defects of the plaster and oral painkillers.