The invention discloses colored plasticine and a preparation method thereof. The colored plasticine is prepared from wheat starch, rice flour, glycerol, edible refined salt, purple sweet potato whole flour suspension, nipagin compound sodium acetate, saturated citric acid solution or citric acid buffer solution. The preparation method comprises the following steps: taking the wheat starch, the rice flour and the edible refined salt according to the weight parts, placing the taken components into a container, grinding, uniformly mixing the obtained powder, and screening to obtain mixed flour; adding the saturated citric acid solution or citric acid buffer solution into the prepared purple sweet potato whole flour solution, and thus obtaining a mixed solution; dropwise adding glycerol and nipagin compound sodium acetate into the mixed flour, adding the mixed solution into the mixed flour under stirring, afterwards taking out the mixture, kneading uniformly, uniformly smearing glycerol on the surface of the finished product obtained through kneading, and packaging the finished product with glycerol through a preservative film. According to the colored plasticine and the preparation method thereof, the raw materials are low in cost, the preparation method is simple and feasible, the colors are controllable, and the colored plasticine is non-toxic and harmless, and easy to popularize.