The invention discloses a multifunctional bio-organic fertilizer and a preparation method thereof, and relates to the technical field of agricultural fertilizers. The multifunctional bio-organic fertilizer is prepared from the following raw materials in parts by weight: 40-60 parts of forestry and agricultural residues, 10-16 parts of active humic acid, 5-15 parts of degreased tea-seed pancake, 0.5-1.5 parts of expanded vermiculite, 0.2-0.8 part of abscisic acid, 0.2-0.8 part of zymophyte, 0.2-0.8 part of beneficial bacterium, 0.2-0.8 part of degrading bacteria, 5-9 parts of urea, 8-12 parts of calcium magnesium phosphate fertilizer, 4-8 parts of potassium sulfate, and 0.5-1.5 parts of medium and trace element. The multifunctional bio-organic fertilizer has the characteristics that the nutritional elements for plant growing are contained; the organic substances are rich; in addition, the contaminated oil can be remediated; the soil structure can be activated; the multifunctional bio-organic fertilizer is applicable to the planting of crops such as rice of southern China, vegetables, watermelon, tobacco, fresh ginger, rape and tea, fruits such as naval orange, grapefruit and pear, garden nursery stock and flowers.