The invention discloses a traditional Chinese medicine for treating yang-deficiency water-flooding type chronic cardiac insufficiency and a preparation method thereof, wherein the traditional Chinese medicine comprises the following raw medicinal materials: poria cocos, coix seed, corn stigma, semen hoveniae, dried orange peel, radix aucklandiae, agilawood, fructus citrus sarcodactylis, fructus citri, allium macrostemon, betelnut peel, sword bean, semen raphani, paederia scandens, semen brassicae, inula flower, cynanchum glaucescens, platycodon root, fructus perillae, folium rhododendri daurici, radix physochlainae, flos farfarae, cortex mori, radix codonopsis, Chinese yam, radix acanthopanacis semticosi, human placenta, cynomorium songaricum, radix polygonati officinalis, cerastiumrvense L. and gorse. The traditional Chinese medicine has the beneficial effects that the traditional Chinese medicine has the efficacies of warming yang to promote diuresis, and mainly treats the yang-deficiency water-flooding type chronic cardiac insufficiency; with utilization of a traditional Chinese medicine theory and through adjustment of the whole blood circulation, the traditional Chinese medicine improves qi and blood of body circulation and pulmonary circulation, treats based on syndrome differentiation, is capable of adjusting arrhythmia, controlling blood pressure, improving body water and electrolyte disorder, enhancing a heart blood-pumping function, improving a respiratory function and the like, has multiple target spots, allows drug efficacy to directly reach nidi, is remarkable in curative effect, and is safe and effective.