The invention discloses a traditional Chinese medicine composition with functions of removing rotten skin and promoting tissue regeneration and a preparation method thereof. The traditional Chinese medicine composition comprises the following raw materials of rhizome coptidis, radix scutellariae, cortex phellodendri, radix notoginseng, safflower carthamus, borneol, short-pedicel aconite roots, williams elder twigs, rhizoma drynariae, radix paeoniae rubra, minium, processed radix aconiti kusnezoffii and sesame oil. The traditional Chinese medicine composition with the functions of removing the rotten skin and promoting the tissue regeneration has the advantages that natural plants are adopted to be combined with traditional Chinese medicine, so that the traditional Chinese medicine composition has the effects of inhibiting bacteria, removing the rotten skin, drawing out the pus and preventing bacterium breeding of the skin, can accelerate the metabolism of the skin, and contains skin splitting regeneration promoting factors to promote the dry and cracked skin healing; the traditional Chinese medicine composition with the functions of removing the rotten skin and promoting the tissue regeneration has a good therapeutic effect on bedsores, burns, scalds and other various traumas; the traditional Chinese medicine composition with the functions of removing the rotten skin and promoting the tissue regeneration is fine and smooth in texture, fresh and cool in odor, no essence, pigment and preservative are added, the traditional Chinese medicine composition can be rapidly absorbed by the skin after use, which can ensure that the skin is dry, comfortable and clean.