The invention discloses a formaldehyde eliminating coating with dual functions of adsorption and decomposition, which solves the problem that the existing coatings release harmful substances such as formaldehyde into air and have no function in eliminating formaldehyde. The formaldehyde eliminating coating comprises the following components by weight percent: 25-30% of coarse whiting, 10-15% of emulsion, 4-10% of calcined kaolin, 4-10% of washed kaolin, 4-10% of titanium dioxide, 4-10% of sepiolite or nanometer TiO2 composite material, 0.1-0.6% of dispersing agent, 0.1-0.6% of wetting agent, 0.1-0.6% of antifoaming agent, 0.1-0.6% of multifunctional assistant, 0.1-0.6% of mildew preventive, 0.1-0.6% of coalescing agent, 0.1-0.6% of antifreezing agent, 0.1-0.6% of bactericide, 0.1-0.6% of thickener, and 25-30% of water. The invention also provides a preparation method of the coating. The coating has very strong function in eliminating formaldehyde, and is safe and reliable.