The invention discloses a feed additive by mixedly fermenting shrimp heads and vegetable feed proteins and a processing method thereof. The method comprises the following steps of: performing squeezing and crushing, pulping with water, and filtration and separation on the shrimp heads to separate out shrimp shells so as to obtain a shrimp paste raw material; mixing the shrimp paste and the vegetable feed proteins according to a proportion, adding bacteria for solid fermentation, and drying and crushing to prepare fermented feed protein powder; and drying the separated shrimp shells to prepare raw materials of chitosan and shrimp shell powder. The method has the advantages of simple process, small equipment investment and low cost; and the feed additive has the advantages of full aroma of the fermented feed protein powder, good palatability, high utilization rate of proteins, rich beneficial functional nutrients such as astaxanthin, small peptide, probiotics and the like, wide application to aquatic and livestock and poultry feeds, improvement of survival rate, good animal growth effect, good feed attraction to aquatic animals, capacity of replacing fish meal in the livestock and poultry feeds, capacity of greatly replacing fish meal in high-grade aquatic feeds, remarkable reduction of feed cost, contribution to environmental protection, power saving, efficiency improvement, and remarkable social and economic benefits.