The invention discloses a cedarwood fiber-based bio-composite material and a preparation method thereof. According to the preparation method, the advantages of good toughness, corrosion resistance, moth resistance, low cost and the like of abandoned cedarwood fibers are fully utilized, the cedarwood fibers are processed through a high temperature extrusion process in an earlier stage, then the cedarwood fibers are mixed with polyvinyl chloride (PVC), and matched with other additives, and proper processing steps and parameters are adopted, so as to obtain the bio-composite material which is high in strength, high in toughness and low in cost by squeezing granulation through a screw rod. The material can be processed to form various products through ways of injection molding, extrusion, mould pressing, machining and the like, is widely used in the fields of packaging, electronics, communication, furniture, decoration, automobiles, airplanes, war industry and the like, is capable of replacing the materials of plastic, logs and the like, and has very good social benefit and economic benefit.