The invention discloses a water-soluble plastic packing bag and a preparation method thereof. The water-soluble plastic packing bag comprises the following compositions: by weight, 30-40 parts of polyvinyl alcohol, 20-30 parts of starch, 10-20 parts of a plasticizer, 6-7 parts of zinc oxide, 1-2 parts of pine tar, 10-12 parts of allethrin, 4-10 parts of bis benzyl sulfide, 2-20 parts of salicylic acid, 1-10 parts of a surfactant , 5-20 parts of an antisticking agent, 6-13 parts of a penetrating agent, 2-10 parts of a pH regulator, and 5-15 parts of a preservative. The water-soluble plastic packing bag is degradable and environmentally safe, can be rapidly degraded in soil, does not affect the surrounding environment, has good heat resistance and no harm to packaged products, and can extend the life cycle of the products.