The invention provides a traditional Chinese medicine pillow for soothing nerves and a preparation method thereof. The traditional Chinese medicine pillow comprises a pillow interior and a pillowcase; materials filled in the pillow interior comprises the components of aizoon stonecrop herb, concha ostreae, magnet, acanthopanax, concha margaritiferallsta, erosaria caputserpentis, amethyst, poria with hostwood, spina date seed, caulis polygoni multiflori, longan aril, lotus seed, lily, lucid ganoderma, cortex albiziae, folium apocyni veneti, rhizoma anemones altaicae, ginseng, polygala tenuifolia, platycladi seed, stigma croci, valerian, fructus choerospondiatis, cinnabar, physochlaina macrophylla and henbane. The preparation method comprises the following steps: cleaning and drying the raw materials; grinding; filtering through a filter net to obtain raw material powder; uniformly mixing the raw material powder according to the ratio; sterilizing through an ultraviolet lamp; packaging into a silk pillow interior; then sleeving the pillowcase to obtain the traditional Chinese medicine pillow. According to the traditional Chinese medicine pillow for soothing nerves and the preparation method thereof, all components in the formula are reasonably matched, which is beneficial for helping sleeping and can treat neurological disease well; all the components coordinately act and complement each other; the preparation process is simple, and mass production applies.