The invention relates to the technical field of a traditional Chinese medicine preparation, and particularly discloses externally-applied skin-generating oil for treatment of burns and a preparation method and application thereof. The skin-generating oil is prepared by soaking the following 15 Chinese herbs in sesame oil: radix scutellariae, rheum officinale, astragalus mongholicus, coptis chinensis, cortex phellodendri, angelica sinensis, sanguisorba officinalis, lithospermum, rehmannia, radix angelicae, cynanchum atratum, bletilla striata, olibanum, myrrh and borneol. When the skin-generating oil is applied in treatment of burns, wound infection caused after injury can be prevented effectively, proliferation and migration of fibroblasts and vascular endothelial cells can be promoted, neovascularization can be induced, wound healing can be accelerated, scar repair can be promoted, the wound healing time can be shortened, Class I-II burns can be cured in 10-12 days, and Class III burns of rabbits can be cured in 20-25 days. When Class III burns of rabbits are treated with the skin-generating oil, the wound area can be reduced from 6 cm<2> to 0.1cm<2>, the wound surface is flat, smooth and soft, and newborn hair is normal. The wound epidermis can be recovered completely, dense hair follicles can be formed in the dermis layer, and almost no difference from normal skin tissues can be produced.