The invention discloses a Chinese-Western compound preparation for treating senile dementia and a preparation method thereof. The Chinese-Western compound preparation is formed by compounding traditional Chinese medicine components and Western medicine components. The traditional Chinese medicine components are prepared from the following raw materials in parts by weight: 10-20 parts of rhizoma gastrodiae, 10-15 parts of radix salviae miltiorrhizae, 10-15 parts of folium ginkgo, 5-10 parts of cortex albiziae, 5-10 parts of fructus alpiniae oxyphyllae, 2-5 parts of dark plum, and 5-10 parts oflumbricus; the western medicines are composed of the following components: 1-1.5 parts of piracetam, 1-1.5 parts of donepezil hydrochloride and 0.5-1 part of vitamin B1. The method of combining Chinese and Western medicines can effectively improve the circulation functions of brain nerves, brain blood vessels and brain blood circulation, improves and treats insomnia, amnesia, hypomnesia and cognitive decline caused by senile dementia, has the advantages of short course of treatment, quick effect and low side effects, and has broad medical application prospects.