The invention relates to a biological compound fertilizer and a preparation method thereof. The biological compound fertilizer is prepared from, by weight, 10-15 parts of a microbial agent, 5-10 parts of lactobacillus plantarum, 5-10 parts of photosynthetic bacteria, 5-10 parts of yeast, 80-120 parts of straw, 30-50 parts of bagasse, 30-50 parts of peanut hulls, 30-50 parts of soybean meal, 30-50 parts of poultry and livestock manure, 30-50 parts of water, 30-50 parts of a modified carrier, 0.5-1 part of a water retaining agent, 3-6 parts of corn starch, 0.5-3 parts of sodium carboxymethylcellulose, 3-5 parts of alkyl glycoside, 0.5-2 parts of a complex enzyme preparation, 0.5-1 part of citric acid, 5-10 parts of fulvic acid potassium powder, 5-10 parts of ammonium molybdate, 5-10 parts of urea phosphate, 5-10 parts of sodium borate, 3-5 parts of zinc sulfate heptahydrate, 3-5 parts of carboxymethyl chitosan and 3-5 parts of crospolyvinylpyrrolidone. The biological compound fertilizer can enhance the disease resistance and immunity of crops, loosen soil, improve the ecological environment, effectively degrade pesticide residues and macromolecular organic matter, increase the crop yield and improve the crop quality.