The invention provides hydroxypropyl chitosan microspheres as well as a preparation method thereof and application thereof in reduction of dielectric loss of vegetable oil, belonging to the field of chitosan modification. The preparation method of the hydroxypropyl chitosan microspheres comprises the following steps: mixing chitosan, having viscosity of 0.25-0.65Pa.s with isopropanol and a first sodium hydroxide solution, adding tetramethyl ammonium hydroxide into the mixture, dropwise adding epoxypropane for carrying out a reaction, cooling and adjusting the pH value to 7, dispersing the product into acetone or water, stirring and carrying out suction filtration, washing with anhydrous ethanol, and carrying out vacuum drying to obtain hydroxypropyl chitosan; preparing the hydroxypropyl chitosan into a solution, spraying the solution onto sodium polyphosphate, carrying out ultrasonic treatment and crosslinking, then washing with water, filtering, adding the product into a sodium hydroxide solution and stirring, and adding glutaraldehyde for carrying out a reaction so as to obtain microspheres; washing the microspheres with water, then leaching the microspheres respectively with organic solvents with volume percentages of 21-29%, 41-49%, 61-69% and 85-89%, and carrying out freeze drying. The modified chitosan prepared by the method can reduce the dielectric loss of the vegetableoil.