The invention discloses a compound medicine for treating insomnia, and a preparation method thereof. The compound medicine is prepared from 2-4 g of Bulbus Fritillaria, 1-3 g of Trichosanthes kirilowii, 3-4 g of Concretio Silicea Bambusae, 2-3 g of Chinese yam, 3-5 g of Fructus Alpiniae oxyphyllae, 1-2 g of lily, 1-3 g of keel, 2-4 g of amber, 1-3 g of pearl shells, 2-5 g of spine date seeds, 1-2g of platycladi seeds, 1-3 g of Radix Polygalae, 3-6 g of Cortex Albiziae, 3-4 g of Caulis Polygoni Multiflori, 2-5 g of Rhizoma Corydalis, and the balance of water. All raw material medicinal materials in the above formula are traditional Chinese medicinal materials according with national or local standard regulations, and have generally proper prices, the preparation process is simple and convenient, the compound medicine has an excellent curative effect, can promote smooth circulation of blood, enhance tissue metabolism and reduce patients' insomnia pains, has a good treatment effect on insomnia patients, and has the advantages of short treatment course, high cure rate, no recurrence and no side effects, and the preparation method is simple, and can be easily enforced and promoted.