The invention discloses a multifunctional liquid fertilizer capable of degrading pesticide residues and a preparation method thereof. The multifunctional liquid fertilizer is prepared from the following components in parts by weight: 5-10 parts of a nitrogen-containing component, 10-20 parts of a phosphorus-containing and potassium-containing component, 2-3 parts of a chelated medium and trace element component, 3-5 parts of amino acid, 8-10 parts of an organic matter, 10-15 parts of humic acid, 10-15 parts of a pesticide detoxifying enzyme, 0.5-2 parts of antifreezing protein, 0.5-1.5 parts of antibacterial peptides and 35-42 parts of water, wherein the pesticide detoxifying enzyme is prepared by mixing protease, cellulase, pectinase, catalase, amylase, glycerin, trimethylolethane, pentaerythritol, xylitol, sorbitol and water. The multifunctional liquid fertilizer can effectively degrade the pesticide residues and reduce the using amounts of pesticides, and can prevent plant diseasesand insect pests and maintain the balance of agroecological environment, so that the agricultural yield and the agricultural income are increased, the quality of agricultural products is improved andthe agricultural production environment is improved; the multifunctional liquid fertilizer has the advantages of comprehensive and balanced nutrition, high plant absorption and utilization rate, wideapplication range, simple preparation technology, economic benefit, high efficiency, environmental protection and the like.