The invention provides a power battery hydrogen storage electrode alloy and a preparation method of the power battery hydrogen storage electrode alloy. The power battery hydrogen storage electrode alloy is formed by low magnesium multi-rare-earth components, the chemical formula is RE1-xMgxNiyAlz, wherein 0.15<=x<=0.2, 3.3<=y<=3.8, and 0.05<=z<=0.15, and the rare earth elements (RE) are at least two elements selected from La, Ce, Sm, Y and Nd. The preparation method is that in inert gas shielding, induction heating smelting is adopted, melting alloy is poured into a tundish and sprayed on the surface of a water-cooling copper roller rotating at a certain speed through a nozzle at the bottom of the tundish to obtain rapid-quenching alloy, and then vacuum annealing is carried out in a vacuum heat treatment furnace. Combined action of the rare earth elements is fully used, the power battery hydrogen storage alloy is prepared by adoption of vacuum melting, the inert gas shielding and the rapid-quenching technology, electrochemical cycling stability of the alloy is improved, and the power battery hydrogen storage electrode alloy and the preparation method of the power battery hydrogen storage electrode alloy have the advantages that the technology is easy to master and suitable for mass production.