The invention relates to the technical field of bone tissue engineering, and discloses a preparation method of a functional bone repair composite scaffold. The method comprises the following steps: preparation of nano decellularized bone meal, preparation of a functional porous nano bone meal-gelatin-chitosan-dexamethasone composite scaffold, and crosslinking. The invention further discloses a nano bone meal-gelatin-chitosan-dexamethasone functional bone repair composite scaffold and application thereof. According to the invention, the functional bone repair composite scaffold has bone matrix components, cell adhesion sites, sufficient mechanical strength and a three-dimensional structure suitable for cell growth and proliferation and nutrient metabolism, the composite scaffold created by combining bone meal with gelatin and chitosan has good connectivity, the nano bone meal is uniformly dispersed in the pore wall, pores and skeleton of the scaffold, has a relatively high surface area, and facilitates the adhesion, growth and proliferation of osteoblasts, and due to introduction of the dexamethasone, the problems of tissue fibrosis and the like caused by inflammatory reaction caused by implantation of the allogenic scaffold can be effectively reduced, and the dexamethasone has an obvious promoting effect on proliferation and differentiation of the osteoblasts.