The invention discloses a Chinese medicine composition for soothing liver, removing stagnation, stimulating appetite, and promoting digestion and a preparation method thereof, belonging to the field of modernization of traditional Chinese medicine. The active components of the Chinese medicine composition comprise the following ingredients: 150 weight portions of Cyperus rotundus prepared with vinegar, 35 weight portions of corydalis tuber prepared with vinegar, 50 weight portions of bitter organe fried with wheat bran, 35 weight portions of sandalwood, 35 weight portions of common aucklandiaroot, 15 weight portions of rhizoma wenyujin concisum, 35 weight portions of radix bupleuri, 75 weight portions of cortex magnolia officinalis prepared with ginger, 35 weight portions of clove, 35 weight portions of aquilaria wood, 25 weight portions of rhizoma galangae, 35 weight portions of green tangerine peel prepared with vinegar, 100 weight portions of dried orange peel, 35 weight portions of licorice, 35 weight portions of cardamom, 25 weight portions of curcuma zedoary prepared with vinegar, 35 weight portions of villous amomum fruit, and 15 weight portions of cinnamomum cassia. The invention has the advantages of stable and controllable quality, remarkably improved curative effect compared with present saled preparation on the market, small dosage needed by patients, and increased bioavailability, and has remarkable economic and social benefits.