The invention discloses external powder for treating dental ulcer and a preparation method thereof. The powder is prepared from the following raw materials in parts by weight: 20-30 parts of terminalia chebula retz, 15-25 parts of indigo naturalis, 12-16 parts of wadalee-gum-tree, 8-12 parts of Coptis chinensis leaves, 16-22 parts of pomegranate bark, 15-20 parts of walnut shells, 14-18 parts of chrysanthemum leaves, 10-15 parts of tea tree root, 12-16 parts of bidens tripartite, 18-24 parts of borneol, 15-20 parts of borax, 12-16 parts of calamitas urinae hominis, 10-15 parts of gypsum rubrum, 8-12 parts of camellia powder, 5-10 parts of honey of various flowers, 10-15 parts of dried cucumber frost and 5-10 parts of dried persimmon frost. The external powder prepared by the invention has the functions of relieving swelling and pain, stopping bleeding, treating cutaneous pyogenic infection, diminishing inflammation, killing bacteria, removing slough and promoting growth of tissue regeneration and the like, accelerates the cure of anabrosis, and can take curative effect quickly and is short in course of treatment. The external powder is a pure traditional Chinese medicine preparation which is free of toxic and side effects, has wide and easily available medicinal material sources, and convenient to apply. The external powder is applied to the affected parts with a little dosage, so that the patients do not feel pain, and dental ulcer cured hardly relapses.