The invention discloses a traditional Chinese medicine composition for treating intestinal cancer and diabetes and a preparation method of the traditional Chinese medicine composition. The traditional Chinese medicine composition for treating the intestinal cancer and the diabetes is prepared from the following raw material medicines: alga, hairy grape stems, radix actinidiae chinensis, radices lithospermi, cordate houttuynia, sculellaria barbata, selaginella doederleinii, semen coicis, poria cocos, white paeony roots, caulis spatholobi, angelica sinensis, prepared rehmannia roots, radix ophiopogonis, ligustrum lucidum ait, cordyceps sinensis, fructus psoraleae, yams, white atractylodes rhizome, astragalus membranaceus, ginseng, costusroot, mangnolia officinalis, radix achyranthis bidentatae, herba cistanche, aloes, rhizoma atractylodis, piper cubeba, semen cassia, christina loosestrife herbs, eucommia, astragalus complanatus, polyporus umbellatus, pericarpium citri reticulatae, oldenlandia diffusa, flowers carthami, semen pini koraiensis, semen pharbitidis, radix aconite, liquidambar formosana hance, gentiana macrophylla, pyrola, capillary artemisia, juncus roemerianus, betel nut, red dates, fructus lycii, rhizoma cyperi, angelica pubescens, Chinese sapium root barks, bunge cherry seeds, fructus cannabis, agastache rugosus, pericarpium arecae, coptidis rhizome, baked ginger, sophora flavescens, agilawood, fructus aurantii immaturus, semen plantaginis, salviae miltiorrhizae, snakegourd fruit, lily flower, radix gentianae, herba violae, fritillaria cirrhosa, gentiana scabra, cooked rhubarb, radix scutellariae, indigo naturalis, rhizoma arisaematis and the like.