The invention provides a traditional Chinese medicine composition for treating children with rheumatoid arthritis and a preparation method thereof. Internal medicine comprises the following raw material medicines: loranthus parasiticus, prepared rehmannia root, divaricate saposhnikovia root, angelica, rhzizoma drynariae, gentiana macrophylla, earthworms, fructus psoraleae, radix achyranthis bidentatae, erodium stephanianum willd, teasel root, cortex moutan, lycopodium clavatum, radix clematidis, radix paeoniae alba, woodlouse, rhizoma atractylodis, radix curcumae, rhizoma corydalis, eucommia, polygonum cuspidatum and radix angelicae pubescentis; and external medicine comprises the following raw material medicines: tripterygium glycosides, cassia twig, frankincense, myrrh, ligusticum wallichii, nux vomica, honeysuckle stem, scorpio, resina draconis, woodlouse, teasel root, earthworms, safflower, beefwood-like clubmoss herb, polygonum cuspidatum, tuberculate speranskia herb and homalomena occulta. The traditional Chinese medicine composition provided by the invention is orally taken and is externally used and has the functions of clearing away heat and eliminating dampness, preventing joint deformity, relieving pain and relieving swelling. The technology has the advantages of convenience in administration, direct access to lesions, strong targeting, easiness for manufacturing the medicine, low cost and the like. The internal use and external use are combined to ensure the functions of replenishing the vital essence and removing heat, dredging the collaterals by resolving damp, eliminating pain, preventing joint deformity and generating no influence of the development of children; and the traditional Chinese medicine composition can promote normal bone growth and reinforce the joints.