The invention discloses a preparation method of urea formaldehyde resin rubber powder, which comprises the following steps: firstly adding formalin with the design amount into a three-neck flask with a reflux condensation tube, regulating the pH value to 1.5-2.5, adding a first batch of urea accounting for 50-70% of the total amount into a reaction kettle, when being at the reaction temperature of 90-95 DEG C, immediately rapidly reducing the temperature to 75-80 DEG C when turbidity appears during the reaction, regulating the pH value to 8.0-9.0, adding a second batch of 10-29% urea, then regulating the pH value to 4.5-5.5, and reacting for 30-40 minutes; and further regulating the pH value to 7.0-8.0, adding a modifier, and performing the acid-base-acid-base process so as to synthesize urea formaldehyde resin prepared by the method, and the viscosity of stock solution does not change greatly in comparison with the ordinary process. After the rubber powder obtained by spray drying forms regenerated rubber with water, the free formaldehyde content is reduced, the bonding strength and the dipping and peeling strength are greatly improved, and the formaldehyde releasing amount is lower than 0.5%.