The invention provides putty powder for building inner and outer walls and a preparation method of the putty powder. The putty powder is prepared from ash-calcium, talcum powder, cement, cellulose, rubber powder, a binding agent and reinforcing powder. The reinforcing powder is formed by mixing composite powder, diatomite and calcium oxide, and the composite powder is obtained by sintering clay, silicon carbide, carbon powder and aluminum hydroxide. The binding agent is prepared from alumina micro powder, modified nanosilicon dioxide, polyethylene glycol and water. The putty powder contains the reinforcing powder and binding agent with special ingredients, when the putty powder is manufactured, the ash-calcium, the binding agent and the reinforcing powder are mixed firstly, hot water is added, the materials are stirred, part of ash-calcium is injected into a microcellular structure or adheres to the surface, then the ash-calcium is fully bonded with the cellulose and the rubber powder added later, therefore, the bonding performance between all the ingredients in the putty powder is enhanced, the anti-cracking performance and hardness of the putty powder are enhanced, and the waterproof performance of the putty powder is also improved to a certain degree.