The invention discloses a water-based working liquid for electrical discharge wire cutting, which comprises the following components by weight percent: triethanolamine, boric acid, oleic acid, polyethyleneglycol PEG-600, petroleum sodium sulfonate, petroleum barium sulfonate, sodium dodecyl sulfate, nonylphenol ethoxylate OP-10, fatty alcohol-polyoxyethylene ether MOA-15, Span S-80, detergent 6501, sodium alcohol ether sulphate AES, hydrolytic polymaleic anhydride HPMA, 1-hydroxy ethylidene-1,1-diphosphonic acid HEDP, glycerol, ethanol, sodium benzoate and water. The invention further relates to a preparation method of the water-based working liquid for electrical discharge wire cutting. The water-based working liquid with the pH ranging from 7.5 to 8.0 is yellowish and transparent, free from toxicity and irritating odor, and easy for biodegradation, and BOD (Biochemical Oxygen Demand), COD (Chemical Oxygen Demand) and other indexes in discharged sewage are in compliancy with the emission standards for environmental protection. The water-based working liquid disclosed by the invention can ensure the bright processed surface of workpiece even when being used in hard water regions.