The present disclosure relates to a pharmaceutical composition for preventing and treating senile dementia and preparation method thereof. The active ingredients of the pharmaceutical composition are prepared from raw medicinal materials comprising 20-50 parts by weight of Epimedii Folium and 15-55 parts by weight of Poria; or from raw medicinal materials comprising 20-50 parts by weight of Epimedii Folium, 15-55 parts by weight of Poria and 10-55 parts by weight of Acanthopanax, or from raw medicinal materials comprising 20-50 parts by weight of Epimedii Folium, 15-50 parts by weight of Poria, 15-50 parts by weight of Acanthopanax and 6-15 parts by weight of Anemarrhenae Rhizoma.