The invention discloses a traditional Chinese medicine composition for preventing and treating a red skin disease of a grass carp and a preparation method. The traditional Chinese medicine composition comprises the following active ingredients: centipeda minima, lophatherum gracile, gardenia jasminoides, a coptis root, amoorcorn tree bark, ash bark, radix sophorae flavescentis, cortex dictamni, a honeysuckle flower, fructus forsythiae, herba andrographitis, folium isatidis, herba violae, a wild chrysanthemum flower, rhizoma paridis, dragonwort, cordate houttuynia, a sargentgloryvine stem, herba patriniae, potentilla discolor, indian iphigenia bulb, groundsel, ampelopsis japonica, Chinese holly, cortex moutan radicis, radix rehmanniae recen, lithospermum, herba cepbalanoplosis segeti, garden burnet, a sophora flower, rumex japonicus and lalang grass rhizome. The traditional Chinese medicine composition has the benefits that the traditional Chinese medicine composition has effects of clearing away heat and toxic materials and removing heat from blood to stop bleeding, has a high cure rate, takes effect quickly, has no medicine residue at the same time as detoxification, anti-inflammation and sterilization, and is low in cost price, the disease has low recurrent possibility, and the traditional Chinese medicine composition focuses on entirety, emphasizes adjustment of overall functions, improves disease resistance of an organism and is safe and reliable for long-term application.