The invention discloses a medicine with anti-inflammatory, anti-hepatitis, anti-tumour and organism immunity improving functions and preparation method thereof, solving the technical problems of improving curative effect of treatment on hepatitis and tumour diseases. The medicine of the invention comprises the following traditional Chinese medicine materials by weight proportion: 800-1200g of sculellaria barbata, 400-600g of dedyotis diffusa and 400-600g of Chinese lobelia. The preparation method thereof includes: the raw materials crude slices are decocted and concentrated, ethyl alcohol is added and standing at room temperature is carried out, filtering is carried out, pH is adjusted to be 8.0, filtrate is recovered until no ethyl alcohol is remained, then ethyl alcohol is added for standing, filtrate is recovered until no ethyl alcohol is remained, pH value is adjusted to be 7.5, and filtration is carried out. Compared with the prior art, the invention has the advantages that sculellaria barbata, dedyotis diffusa and Chinese lobelia have the efficacies of clearing heat and detoxicating, eliminating blood stasis for analgesic and inducing diuresis for reducing edema, combination of the three not only can realize anti-inflammatory, anti-hepatitis, anti-tumour functions but also can improve organism immunity, liver and spleen can be obviously shrunk for hepatitis patients, and transaminase and other liver function indexes can be improved in an all-round way.