The invention discloses a preparing method of folded-structure textured auxetic yarn. The method is characterized by including the steps of selecting yarn with core yarn being elastic filament as the raw material, conducting deformation treatment on surface layer fiber or core yarn of the yarn through mechanical deformation, physical deformation or mechanical and physical combined deformation so as to endow yarn surfaces with loop structures, folding the loop structures on the yarn surfaces and leading folded auxetic structures in the yarn, conducting yarn setting on the folded yarn to stabilize the folded structures in the yarn, and conducting after-treatment or functional treatment on the set yarn to improve the mechanical property, tactile style or visual style of the yarn or endow the yarn with functions. The prepared stretching yarn has the advantages of auxeticity, structural stability and good tactile and visual effects; the yarn is high in production efficiency, provides the basis for wide application of the stretching yarn, and can be used in the fields of clothing, filtering materials, biomedical application, tissue engineering, photoelectric materials, surge guard, sensors, composite materials and the like.