The invention relates to a Pd/TiO2/cotton fiber composite formaldehyde indoor temperature oxidation catalyst and a preparation method thereof. The catalyst is prepared from a cotton fiber carrier, a TiO2 surface coating and a Pd active ingredient dispersed in the surface of the TiO2 coating; the cotton fiber carrier is absorbent cotton fiber; the TiO2 coating is a nano TiO2 coating of which the grain size ranges from 1nm to 10nm; the Pd active ingredient exists in a zero valence form, the grain size of the Pd active ingredient ranges from 1nm to 10nm and the loading capacity of the Pd active ingredient is 0.05-3wt%. The Pd/TiO2/cotton fiber composite formaldehyde indoor temperature oxidation catalyst has the characteristics of graded middle and large hole structure, light weight and flexibility, Pd and the TiO2 coating as well as carrier cotton fiber are combined firmly, the active ingredient simple substance Pd is well dispersed in the surface of the TiO2 coating and is low in grain size, formaldehyde can be efficiently subjected to catalytic decomposition at indoor temperature, the use amount of noble metal is low, the air resistance is low, and the catalyst can be used in various air purifiers.