The invention provides a water-in-water colorful coating and a preparation method thereof. The coating comprises a colloidal solution, a disperse phase and a continuous phase, the colloidal solution is formed by dissolving sodium pyrophosphate and magnesium lithium silicate in water, the disperse phase is mainly composed of a hydrophobic regulator, a wetting dispersant, cellulose, a pigment, the colloidal solution, an emulsion and water, and the continuous phase is mainly composed of the hydrophobic regulator, a film forming agent, an antifoaming agent, propylene glycol, a thickener, the emulsion and water, wherein the hydrophobic regulator is a divinyl benzene and 1-vinyl imidazole copolymer and/or a divinyl benzene and vinyl ionic liquid copolymer. The coating needs no organic solvents, and the waterproof property of the coating is increased through the hydrophobic regulator, so the colorful coating has the advantages of good waterproof property, bleeding resistance, stability, automatic cleaning and pollution prevention.