The invention relates to the technical field of a rare earth permanent magnetic material and relates to a magnetic phase composite rare earth permanent magnetic alloy and a preparation method thereof. The permanent magnetic alloy comprises the following chemical components in mass percentage: REaFe99-a-bB1Mb, wherein a is more than or equal to 28, but less than or equal to 32, b is more than 0, but less than or equal to 10, RE comprises at least two selected rare earth elements from La, Ce, Pr, Nd, Pm, Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb and Lu, and M is one or more from Co, AL, Cu, Ga, Nb, Mo, Ti, Zr and V. Magnetic phase composite preparation is performed on the permanent magnetic alloy by crushing, mixing, sintering and thermally treating at least two rapid hardening strips with different components, wherein the rapid hardening strips are at least two 2-14-1-type magnetic main phases (RE) 2Fe14B containing different rare earths respectively. Through mutual proportioning of different proportions of rapid hardening strips, a magnet containing designed components is prepared; the magnet comprises two or more 2-14-1-type magnetic phases consisting of different rare earths, including a 2-14-1-type magnetic phase consisting of a single rare earth; and good comprehensive magnetic property is obtained on the premise of reducing the heavy rare earth content.