The invention discloses a preparation method of modified micron zero-valent iron and an application method of the modified micron zero-valent iron in remediation of heavy metal contaminated soil. The preparation method of the modified micron zero-valent iron comprises the steps of cleaning of iron raw materials, preparation of micro iron, ultrafine grinding and modifying treatment. A modifying agent composed of water, xanthan gum, sulfide, a stabilizing agent, zeolite and blast furnace slag is adopted in the step of modifying treatment. The preparation method of the modified micron zero-valent iron has the beneficial effects that the production process of the modified micron zero-valent iron is simple, and the effect similar or superior to micron zero-valent iron is achieved while the cost is reduced; and in addition, the reaction activity is controlled, the oxidation rate is decreased, excellent stability is obtained, and the acting time of the micron zero-valent iron is longer. By the adoption of the application method of the modified micron zero-valent iron, the remediation cost of heavy metal contaminated underground water is further reduced. According to the preparation method of the modified micron zero-valent iron and the application method of the modified micron zero-valent iron in remediation of heavy metal contaminated soil, organic fertilizer is added in the soil treatment process so that the fertility of soil can be improved, the structure of soil can be improved through humic acid produced by the organic fertilizer, heavy metal elements, such as lead, chromium and arsenic, in underground water can be removed, and the concentration of pollutants such as nitrate and perchlorate can be reduced.