Lubricating oil specially used for a biogas engine and a preparing method thereof are disclosed. The lubricating oil includes phosphite, polyoxyethylene hydrogenated castor oil, phosphoric acid, 2(2-ethoxyethoxy)ethanol, sorbitol, 4-hydroxybenzaldehyde, isodehydro-costuslactone, aerosil, lupenyl palmitate, cross-linked polyvinylpolypyrrolidone, naphthenic oil, butter, a tetra(hydroxyethyl)ammonium swelling oily agent, succinimidyl succinate, boron nitride, glycerin, polyvinylsuccinimide, graphite and amino thio ester. The lubricating oil is developed specially for the biogas engine, and is prepared by adopting a unique formula and a unique processing process. Aiming at internal lubrication of the biogas engine, the lubricating oil ahs characteristics of high-temperature resistance, not liable volatilization and high adhesive force and has popularization and application value.