The invention discloses a high-temperature high-power rare earth resistance paste and a preparation method thereof. The high-temperature high-power rare earth resistance paste comprises a functional phase, an inorganic adhesive phase, a burning promoter and an organic carrier, wherein the functional phase is composite powder consisting of micrometer silver powder and bismuth ruthenate powder; the inorganic adhesive phase is lead-free pyroceram powder consisting of SiO2, MgO, B2O3, ZnO, Bi2O3, rare earth oxides and a nucleation agent; and the organic carrier is a mixture consisting of a solvent, resin, a dispersing agent, a deforming agent and a thixotropic agent. The resistance paste has the advantages that firstly, the damages of lead on the environment and human bodies can be avoided; secondly, the resistance paste is high in compatibility, wettability, thermal performance, electrical performance, manufacturability and adaptability; thirdly, the resistance paste is high in binding performance with ceramic and stainless steel substrates; and fourthly, the resistance paste is high in printing performance, burning performance and compatibility. The preparation method comprises preparation of the inorganic adhesive phase, preparation of the functional phase, preparation of the organic carrier and preparation of the resistance paste in sequence, and the resistance paste can be produced and prepared effectively.