The invention discloses an oily diamond grinding liquid and a preparation method thereof, and belongs to the technical field of surface superfine grinding. The grinding liquid comprises the following components by weight percent: 0.001%-10% of diamond micro powder, 0.001%-20% of surface active agent, 0-20% of dispersant, 0-10% of pH value regulator, 0-10% of wetting agent and oil in balancing amount. The oily diamond grinding liquid is mainly applied to surface grinding and polishing of silicon carbide wafers, LED sapphire substrate slices, ceramic, optical fiber, dies, semi-conductor compound wafers and the like. By the use of the oily diamond grinding liquid provided by the invention, the polishing efficiency can be greatly improved; the dispersing performance is good; a uniform and stable state can be kept for a long time; the degree of finish of products polished with the oily diamond grinding liquid is high; the polishing effect is good; no ingredient harmful to human body is contained; the cleaning is easy; and the environmental protection is facilitated.