The invention discloses a capsule for treating insomnia and a preparation method thereof, which are prepared from the following parts by weight: 100-130 parts of rush extract, 80-120 parts of eucalyptus extract, and 80-120 parts of acacia extract, safflower extract 40-80 parts, Shichangpu extract 40-60 parts, starch 10-30 parts, magnesium stearate 1-3 parts. The capsule for treating insomnia prepared by the invention has good therapeutic effect on patients with insomnia and forgetfulness, has low recurrence rate after cure, and has small side effects, and the raw materials are rush, dodder, acacia, safflower, extract of scutellaria, accessory starch and Magnesium stearate, wide source of raw materials, simple preparation method, suitable for large-scale industrial production.