The invention relates to externally-used traditional Chinese medicine lotion for removing dandruff and hair oil, which is used for solving the problems about dandruff and hair oil, and adopts the technical scheme that the externally-used traditional Chinese medicine lotion is prepared from the drugs of 13-17 g of radix stemonae, 13-17 g of radix sophorae flavescentis, 13-17 g of divaricate saposhnikovia roots, 17-23 g of pericarpium zanthoxyli, 9-11 g of alisma, 13-17 g of cacumen biotae, 17-23 g of cassia nomame, 13-17 g of radix salviae miltiorrhizae, 9-11 g of white paeony roots, 13-17 g of szechuan lovage rhizome, 13-17 g of folium mori, 9-11 g of gastrodiae tuber, 13-17 g of fleece-flower roots and 13-17 g of liquorice. A preparation method comprises the following steps: wrapping the drugs with gauze and putting the drugs into a casserole, adding cold water for soaking, using big fire for decocting, changing big fire into small fire for continuous decocting after boiling, filtering to enable the liquid medicine to be for standby, then adding boiled water into dregs of a decoction, continuously decocting, filtering out liquid medicine, mixing the two liquid medicine and putting into the casserole, using small fire to decoct again and cooling the liquid medicine, so as to obtain the externally-used traditional Chinese medicine lotion.