The invention relates to an ultrafine diamond grinding wheel and a preparation method thereof. The preparation method comprises the following steps: (1) dissolving acrylamide and N,N'-methylenebisacrylamide into water to obtain a premixed liquid; (2) mixing a dispersing agent, a plasticizer, a modifier, a defoaming agent and the premixed liquid to obtain a basic mixed liquid; (3) mixing an abrasive material and a glass binder to obtain powder; (4) mixing the powder and the basic mixed liquid, performing grinding, and performing degassing to obtain an abrasive material slurry; (5) adding a curing agent solution into the abrasive material slurry, performing uniform stirring, injecting the stirred material into a mold for curing, performing demoulding, and performing drying to obtain a greenbody of the grinding wheel; and (6) roasting the green body of the grinding wheel to obtain the ultrafine diamond grinding wheel. The ultrafine diamond grinding wheel provided by the invention can realize high-efficiency, ultra-smoothness, low-damage grinding and polishing processing of zirconium oxide core-insertion products, and has a uniform structure, high processing efficiency, and low abrasion consumption.