The invention discloses an externally-applied traditional Chinese medicament for treating psoriasis and fungal infectious skin diseases. The externally-applied traditional Chinese medicament is characterized by comprising the following traditional Chinese medicinal materials in parts by weight: 2-10 parts of calomel, 3-12 parts of verdigris, 3-12 parts of semen momordicae, 6-25 parts of pepper, 6-25 parts of sublimed sulfur, 2.5-9 parts of frankincense, 2.5-9 parts of myrrh, 6-25 parts of divaricate saposhnikovia root, 10-60 parts of cypress shell, 3-12 parts of chaulmoogra and 0-10 parts of potassium nitrate. The invention also discloses a preparation method of the externally-applied traditional Chinese medicament, and the preparation method comprises the following steps: processing the weighed traditional Chinese medicinal materials to prepare mixed traditional Chinese medicinal powder; mixing the mixed traditional Chinese medicinal powder, tung oil and sesame oil. The externally-applied traditional Chinese medicament for treating psoriasis and fungal infectious skin diseases has the characteristics of small side effects and hard relapse after healing, and can be used for killing insects and counteracting toxic substances, dispelling wind and relieving itching, removing inflammation and toxicity, removing stasis and toxin, and activating blood circulation to generate tissue generation.