The invention discloses a pharmaceutical composition for treating diabetic retinopathy caused by deficiency of both vital energy and yin and a preparation method of the pharmaceutical composition. The pharmaceutical composition comprises the following medicinal materials: tremella, smilax starts, spiranthes sinensis ames, alligator weed, myrobalan, intermediate peashrub root, dendrobe, carapax eretmochelyos, atriplex centralasiatica, dunn antiotrema root, hovenia dulcis thumb, sargentgloryvine stem, hairystalk loosestrife herb, denseflower bulbophyllum herb, pholidota cantonensis, persimmon frost, glossy privet fruit, blackend swallowwort root, angelica sinensis, west szechwan pyrethrum flower, ginseng, ulva, radix ophiopogonis, vittaria flexuosa, schisandra chinensis, semen thlaspi, dried radix rehmanniae and akebia quinata. The pharmaceutical composition has the efficacies of tonifying qi, nourishing yin, promoting blood circulation, improving eyesight, clearing heat, moistening dryness, helping production of saliva and slaking thirst, is mainly used for treating diabetic retinopathy caused by deficiency of both vital energy and yin; scientific combination is carried out by employing the traditional Chinese medicines with different medicine properties; microcirculation of ocular tissues, nerves and blood vessels can be prompted to be normal; the metabolic cycle of cells is delayed; eye diseases leading to blindness is prevented; and the pharmaceutical composition has the advantages of fast acting, high effective rate, accurate curative effect, short treatment course, no a toxic or side effect and low price.