The invention discloses a new traditional Chinese medicine composition for treating chronic hepatitis and a preparation method thereof. The traditional Chinese medicine composition mainly comprises the following Chinese medicinal herbs of dried orange peel, rhizoma cyperi, pericarpium citri reticulatae viride, radix scrophulariae, root of rehmannia, folium isatidis, root of kudzu vine, houttuynia cordata, indigo naturalis, peach kernel, red flower, radix paeoniae alba, Tuckahoe, rhizoma alismatis, oriental wormwood, desmodium, polygonum cuspidatum, root of red-rooted salvia, radix bupleuri, angelica sinensis, herba lycopi, earthworm, goldthread, felwort and root bark of the peony tree. The traditional Chinese medicine composition can be prepared into a common oral preparation according to a conventional traditional Chinese medicine preparation method. The invention can remarkably improve the symptoms of mild acratia, inappetence, abdominal distension, pain over the liver and the like of chronic persisting hepatitis, and can improve the symptoms of asthenia, poor appetite, abdominal distension, semiliquid, pain over the liver, poor complexion, poorer health, manpower reduction, hepatomegaly accompanied with haphalgesia and rap pain, and splenomegaly of the chronic active hepatitis and the symptoms of jaundice, spider angioma, liver palms, acne and the like caused by the chronic hepatitis. The invention can also improve the symptoms of long-term obvious dysfunction of liver, ALT continuous increase or repeated fluctuation, albumin reduction, globulin increase, gamma globulin or IgG increase, time extension of protrombin time, capability of positive reaction in self antibody and rheumatoid factors, capability of circulating immune complex increase, capability of addiments C3 and C4 reduction and the like, and has accurate remarkable clinical treatment effect and rapid effect taking.