The invention provides a Chinese medicinal preparation for treating insomnia and dreaminess. The Chinese medicinal preparation is prepared from the following Chinese herbal medicines of indigofera carlesii, chrysanthemum, divaricate saposhnikovia root, turmeric root-tuber, spina date seed, tortoise shell, gentian, cinnabar, common selfheal fruit-spike, dangshen, grassleaf sweelflag rhizome, cicada shell, blighted wheat, mulberry, mumosa pudica, lotus seed, sharpleaf galangal fruit, bamboo shavings, tuber fleeceflower stem, fortune eupatorium herb, mother of pearl, costus root, common rush, succinite, medicinal indianmulberry root, bamboo leaf, silktree albizzia bark, pawpaw, shelled cedar seed, valerian, red-rooted salvia root, magnetite, uncaria, apricot kernel and lily. The Chinese medicinal preparation has a scientific formula and is prepared on the basis of many years of clinical tests. The Chinese medicinal preparation is characterized in that the treatment course is short, and the Chinese medicinal preparation does not have any toxic or side effects, has a good curative effect on the most common symptoms of insomnia, such as lack of sleep, difficulty in falling asleep, unsound sleep, early awakening, difficulty in falling asleep again after awakening, awakening with a start from a nightmare, nightmares for a whole night, fatigue after sleep and the like, and has a good effect on various symptoms and mental states caused by insomnia.