Provided is a moisturizing, anti-wrinkle, and anti-allergic traditional Chinese medicine composition and a preparation method thereof. The traditional Chinese medicine composition has an aqueous extract of Dendrobium nobile, Viola tricolor, Ophiopogon japonicus, Tremella fuciformis, and an oat material as active ingredient. The oat material is oat grains, oat flour, or oat bran. In the composition, the Dendrobium nobile, Viola tricolor, Ophiopogon japonicus, Tremella fuciformis and oat material have a weight ratio of 5-15:2-10:2-10:1-5:1-5, and preferably 12:6:3:2:2. The Dendrobium nobile, Viola tricolor, Ophiopogon japonicus, oat material, and Tremella fuciformis are combined and extracted for external use, with which moisturizing and also delaying skin aging, anti-allergic and anti-chapping efficacies are achieved by means of water retention, maintenance of normal physiological functions of aquaporins, and others.