Objective To observe the clinical effect of modified Baihe Dihuang Decoction combined with auriculotherapy for the treatment of type 2 diabetes accompanied by insomnia. Methods 56 patients were randomly divided into two groups: modified Baihe Dihuang Decoction combined with auriculotherapy group（treatment group） and Zopiclone Tablets group（control group）. Both groups were treated for 28 days. Pittsburgh sleep quality index（PSQI）, TCM symptom scores, Hamilton Anxiety Scale（HAMA） and Glycosylated serum protein（GSP） were observed before and after the treatment. Results Both two groups of patients were been improved in sleep quality（P<0.05）, and GSP and HAMA scores were lowered than that before the treatment（P<0.05）. Compared with the control group, the improvement of sleep quality, sleep efficiency, daytime dysfunction index, HAMA and TCM symptom scores in the treatment group were significantly improved（P<0.05）. Conclusion Chinese herbal medicine combined with auriculotherapy is more effective on type 2 diabetes with insomnia, and is worth popularizing.