The invention discloses a traditional Chinese medicine composition improving dementia and a preparation method and application thereof. The traditional Chinese medicine composition improving the dementia is prepared from a rhizoma anemarrhenae extract, a folium ginkgo extract, a rhizoma curcumae longae extract, soybean lecithin, a kirilow rhodiola root extract, a radix polygalae extract, a sharpleaf galangal fruit extract, a green tea extract, a grape seed extract, phosphatidylserine, Y-aminobutyric acid, euphausia superba oil powder and punicosides. The traditional Chinese medicine composition can obviously decrease the beta-AP plaque area inside the brain, forms and number of nerve cells around an injection region and in a more distant region can be obviously improved, and a protective effect on the neuronal toxicity caused by beta-AP is achieved. Meanwhile, according to the experiment, an objective basis is provided for further researching and developing the traditional Chinese medicine for treating the dementia by researching the reaction and action mechanism of a traditional Chinese medicine composition dementia animal model.