The invention discloses a traditional Chinese medicine compound for improving sleep quality, a preparation method and application thereof. The traditional Chinese medicine compound is prepared from the following components in parts by weight: 10-25 parts of agastache rugosus, 10-25 parts of herba eupatorii, 25-40 parts of flos albizziae, 2-7 parts of agilawood, 4-10 parts of frankincense and 4-10parts of myrrh. The compound is also prepared from medicinal materials, such as spica prunellae, fresh ossa draconis, raw oyster, flos chrysanthemi, ramulus et uncus uncariae, amber powder, radix polygalae, poria with hostwood, rhizoma acori graminei, radix curcumae and roses. The combination of agastache rugosus, herba eupatorii, flos albizziae, agilawood, frankincense and myrrh is taken as a traditional Chinese medicine formula. Besides, proper traditional Chinese medicinal materials can be added and reduced according to specific manifestation difference of insomnia comorbidity. A compound formula suitable for insomniacs with different comorbidities is acquired. A clinical test proves that the traditional Chinese medicine compound has a sleep-improving function as good as that of oral drugs, can quickly take effect and is free from toxic side effect.