The invention discloses a polymer material containing microencapsulated rare earth metal hypophosphite, and a preparation method thereof. According to the percentages in the total mass of the composite material, 30-90% of a polymer material, 5-15% of microencapsulated rare earth metal hypophosphite, 5-10% of a nitrogen-series flame retardant, 0-30% of an enhancing agent, 0-6% of a char-forming agent, 0-2.5% of a nano-grade synergist, 0-5% of a compatibilizing agent, 0-1% of a lubricant, and 0-0.5% of an antioxidant are well mixed; the mixture is heated to a temperature of 120-265 DEG C; melt blending, extrusion, drawing, cooling, pelletizing and bake-drying are carried out, such that the polymer material provided by the invention is obtained. The polymer material provided by the invention has good flame retardant property, good mechanical performances, good water precipitation resistance and good weather resistance. With the preparation method, defects of high halogen flame retardant environmental hazard, high inorganic flame retardant addition amount, poor thermal stability, poor water resistance and the like of traditional polymer flame-retardant modification technologies are overcome. The method and the material have good application prospect.