The invention provides chilli sauce, which is prepared from a raw material composition by boiling, wherein the raw material composition contains capsicum, flour paste, sugar, vinegar, salt, monosodium glutamate, fruits, peanuts, gingers, garlic and oil. The invention further provides a preparation method of chilli sauce. Capsicum, flour paste, sugar, vinegar, salt, monosodium glutamate, fruits, peanuts, gingers, garlic and oil are used as raw materials, which are boiled to obtain the chilli sauce after mixed. The chilli sauce not only has advantages of brilliant color, delicious taste, abundant nutrition, moderate pungent taste, long aftertaste, but also has a long shelf-life, and can be preserved for two years without deterioration by seal and normal temperature preservation in a condition without adding any preservatives. Furthermore, the chilli sauce can be prepared only by mixing the raw materials and then boiling the raw materials without fermentation, has advantages of simple preparation technology and short preparation period, and is not only suitable for household self-made and edible, but also suitable for large scale production.