The invention relates to a needle bush fiber yarn and a preparation method for the same and application. The paper yarn is mainly made of main material and auxiliary material according to weighty by parts. The main material comprises 100 parts of needle bush slurry; the auxiliary material is formed by 0.04 to 0.06 parts of softener, 0.06 to 0.08 parts of water-repellent agent and microscale of dyeing agent. The paper yarn preparation step is formed by first, preparing slurry, in which needle bush is pulped with water, second, adding auxiliary material and evenly stirring, third, making paper, in which making paper slurry into thin weaving paper with weight of 11 to 22g, fourth, slitting the paper into paper strips with 2 to 4mm width, and fifth spinning, in which twisting the elongated paper strip into 21 to 32 paper yarns. The paper yarn can be applied to paper-made socks, underwears, knitting shirts, paper towel, paper shoes and paper caps and great ventilation and water absorption can be achieved; sweat can be absorbed and bacteria can be resisted and odor can be eliminated; and the needle bush fiber paper yarn can be recovered, thereby causing no pollution to the environment.