The invention relates to a multifunctional polypropylene composite material and a preparation method thereof. The composite material is prepared from a thermoplastic polypropylene resin matrix, inorganic particles, thermal conducting fillers or a halogen-free flame retardant, carbon-based thermal conducting fillers, toughening fillers and other processing additives, the highest heat conductivity coefficient of the composite material is larger than 5.0 W/m.K, the insulating property is excellent, the vertical flammability is UL94 V-0, and the mechanical properties are excellent. The operation is simple, the cost is low, the multifunctional composite material with excellent comprehensive performance can be prepared in one step, industrialized production is easy to achieve, and the multifunctional polypropylene composite material can be widely used in such fields as heat exchangers, instrument shells, circuit components, automobiles, chemical energy and aviation, etc.