The invention discloses thixotropic epoxy resin, a preparation method and application thereof in LED chip packaging. The preparation method consists of: (1) weighing bisphenol A epoxy resin, aliphatic epoxy resin, a thixotropic agent fumed silica, an adhesive force promoter, an antioxidant, an ultraviolet absorbent and a defoaming agent, and mixing them evenly to obtain a mixture 1; (2) weighing anhydride, diol, hydroxyl-terminated polybutadiene, and 2, 6-di-tert-butyl-4-methylphenol to carry out reaction to obtain a mixture 2; and (3) mixing the mixture 1 with the mixture 2, adding a phosphine-containing catalyst, and stirring the substances evenly at room temperature, thus obtaining the thixotropic epoxy resin. The method provided by the invention is simple, the technological parameters are easily controllable, and the preparation process does not involve solvent, and is green and environment-friendly. The obtained thixotropic epoxy resin has long storage life and good packaging effect. The thixotropic epoxy resin can be applied in chip packaging, and is especially suitable for chip packaging on a planar substrate, the glue mixing and dispensing process in original technology can be avoided, the production efficiency is high, the rate of finished products is high, and the cost is low.