The invention relates to a preparation method of sludge-straw composite biomass activated carbon, which comprises the following steps (1) sufficiently mixing and kneading municipal sludge as a main raw material, agricultural waste as an auxiliary material and wood tar as a binder, granulating, and drying to obtain sludge-straw composite particles, (2) feeding the sludge-straw composite particles into a carbonization furnace, carbonizing and activating at the same time under an oxygen-free or oxygen-limited condition to obtain a product sludge-based biomass activated carbon and pyrolysis gas, cooling the sludge-based biomass activated carbon, and packaging the cooled sludge-based biomass activated carbon, and (3) performing dust removal and purification on the pyrolysis gas to obtain wood tar, wood vinegar and non-condensable gas, returning the non-condensable gas as fuel to the carbonization furnace, returning a part of the wood vinegar as an activating agent to be sprayed into the carbonization furnace, and recycling the wood tar as a granulation raw material. The activated carbon is prepared from the sludge and the agricultural straw, the preparation method is simple, the price is relatively low, good economic benefits and ecological benefits are achieved, and high market competitiveness and popularization value are achieved.