The invention relates to the technical field of traditional Chinese medicine preparations, particularly to a traditional Chinese medicine preparation for treating somnambulism of children and a preparation method thereof. The traditional Chinese medicine preparation for treating the somnambulism of children is composed of the raw medicines of, by weight part, 5-8 parts of radix bupleuri, 5-10 parts of thuja sutchuenensis, 5-10 parts of nacre, 3-5 parts of lucid ganoderma, 8-12 parts of spina date seed, 5-10 parts of cortex albiziae, 5-10 parts of caulis polygoni multiflori, 5-10 parts of radix pseudostellariae, 2-3 parts of polygala tenuifolia, 8-12 parts of poria cocos, 8-12 parts of liquorice, 3-5 parts of dens draconis, 3-5 parts of wheat and 3-5 parts of yam. The traditional Chinese medicine preparation for treating the somnambulism of children takes pure traditional Chinese medicines as the raw materials, and through organic combination of multiple traditional Chinese medicines which supplement one another in effects, gives full play to synergistic effects of components. The traditional Chinese medicine preparation for treating the somnambulism of children obtains the effects of liver calming, heart fire cleaning, spleen tonifying, stomach harmonizing, convulsion relief, nerve relief, qi circulation promoting and blood stasis dispersing, is significant in efficacy on treating sleep terror, somnambulism, night cry, spontaneous perspiration, sleep perspiration and the like of children, and achieves the aim of treating both symptoms and causes of the somnambulism of children. Proved by clinical practice, the traditional Chinese medicine preparation for treating the somnambulism of children is significant in effects and rapid in efficacy and achieve a total effective rate up to 95.8%.