The invention relates to waterproof crack-resistant inorganic heat-insulating mortar and a preparation method thereof. The mortar comprises 5-10 m<3> of small expended and vitrified balls, 0-1 m<3> of pottery sand, 750-850 kg of ordinary portland cement, 50-100 kg of calcium powder, 35-70 kg of hydrated lime, 30-55 kg of siliceous dust, 15-20 kg of dispersible polymer powder, 4-8 kg of hydroxypropyl methyl cellulose ether, 1-2 kg of mekralon, 0.5-1 kg of capillary crystalline waterfroof agent, and 3-5 kg of wood fiber. The preparation method comprises the following steps: loading ordinary portland cement, siliceous dust, hydrated lime, hydroxypropyl methyl cellulose ether, dispersible polymer powder, calcium powder, mekralon, capillary crystalline waterfroof agent and wood fiber at one time, and stirring for 3 min; adding small expended and vitrified balls and pottery sand in the stirred powder blend, and continuously stirring for 2 min; and packaging and storing the finished products in warehouse. Compared with the prior art, by using the pottery sand and capillary crystalline waterfroof agent, the problems of large water absorption, easy cracking when water seepage occurs and the like of traditional inorganic small expended and vitrified ball heat-insulating mortar are solved.