The water-soluble fertilizer is prepared from the following raw materials in parts by weight: 17 to 50 parts of ammonium polyphosphate, 10 to 60 parts of organic potassium salt, 10 to 40 parts of urea, 1 to 5 parts of sodium octaborate tetrahydrate, 1 to 5 parts of EDTAzinc, 10 to 30 parts of glacial acetic acid, 1 to 5 parts of xanthan gum and 1 to 3 parts of tea polyphenol. According to the water-soluble fertilizer provided by the invention, all the raw materials are matched for use according to a certain proportion, so that the proportion of nitrogen, phosphorus and potassium and trace elements can be optimized, the microbial environment of soil can be improved, the utilization rate of applied nitrogen, phosphorus and potassium by crops is increased, and the yield-increasing effect of the crops is more remarkable. The invention also provides a preparation method of the water-soluble fertilizer.