According to the compound organic fertilizer and the preparation method thereof, the livestock and poultry manure, the straw powder and the caragana microphylla powder are selected as raw materials, the raw materials are decomposed into the fertilizer rich in micromolecular organic matter through the steps of steam explosion, compost fermentation and the like, nutrients are balanced, fertility is lasting, and growth and development of plants can be effectively promoted after the compound organic fertilizer is applied. Meanwhile, bentonite, rectorite powder, coco coir, humic acid, a water-retaining agent, chitosan and other raw materials are further added into the fertilizer, the composite organic fertilizer with the particle size of 3-5 mm is prepared through mixing granulation, agricultural waste resources are utilized, the application amount of the chemical fertilizer is reduced, ecological damage and environmental pollution caused by excessive application of the chemical fertilizer are avoided, and a good ecological cycle is formed; meanwhile, agricultural travel income increase can be achieved, and agricultural sustainable development is promoted.