The invention belongs to the technical field of health products and discloses an insomnia paste for treating insomnia and a preparation method of the insomnia paste. The insomnia paste is made of a traditional Chinese medicine ointment, nonwoven cloth, a magnetic piece and anti-sticking paper, wherein the traditional Chinese medicine ointment is composed of amber, wild jujube seeds, lily, lotus seeds, longans, traditional Chinese medicine agilawood, sandalwood, lysimachia foenum-graecum, tuber fleeceflower stems, pearl powder, animal bone fossils, salvia miltiorrhiza, albizia flowers, polygalatenuifolia and edible vinegar. The invention provides an external medicine which is safe, reliable, free of toxic or side effect and convenient to use to treat insomnia, twelve authentic Tai medicines are finely selected, that is, traditional Chinese medicines such as wild jujube seeds, lily, lotus seeds, longans, traditional Chinese medicine agilawood, sandalwood, lysimachia foenum-graecum and tuber fleeceflower stems, brain nerve can be relaxed, and functions of calming nerve and helping sleep can be achieved; due to an advanced hypoallergenic gel ointment, and together with a dream sleep awaking prevention method, the insomnia paste has a remarkable effect on various symptoms caused by sleep; due to external application, oral taking or acupuncture is avoided, livers and kidneys can beprotected, no toxic or side effect is caused, and problems such as western medicine dependency, addiction and drug resistance of western medicines can be avoided.