The invention discloses cable insulated rubber for the ship hydrophone equipment and a preparation method thereof. The rubber comprises the following components in parts by weight: 11 parts of ethylene propylene rubber 2470, 7-9 parts of ethylene propylene rubber 578K, 0.1-0.3 part of dibenzothiazyl disulfide, 1.5-2.5 parts of zinc oxide, 0.5-0.8 part of 2-Mercaptobenzimidazole, 0.4-0.7 part of 2,2,4-trimethyl-1,2-dihydroquinoline polymer, 1-1.5 parts of titanium white powder, 1.5-2.0 parts of microcrystalline wax, 0.2-0.5 part of stearic acid, 2-3 parts of white carbon black, 8-12 parts of ultrafine coupling agent, 0.2-0.4 part of calcined clay, 5-8 parts of ultrafine talcum powder, 1-1.5 parts of red lead masterbatch, 1-1.5 parts of dicumyl peroxide and 0.15-0.25 part of quinone dioxime. The preparation method comprises the following steps: mixing ethylene propylene rubber, then adding zinc oxide and some components, filtering rubber, rolling, cooling, adding dibenzothiazyl disulfide, finally adding dicumyl peroxide and quinone dioxime, performing triangle packaging, thinning, and discharging the prepared rubber sheets. The insulated rubber of the invention has good insulating property and long service life and can meet the operational requirements of the ship hydrophone equipment.