The invention relates to water-soluble near infrared luminescent quinoline squaraine dye, of which the molecular structural general formula is shown on the figure. The method for preparing the water-soluble near infrared luminescent quinoline squaraine dye comprises that: firstly, 2-methylquinoline is subjected to bromination, sulfonation, nitration and acylation and reacts with acetonitrile and iodo-acid or iodo-ester to generate quinoline quaternary ammonium salt; and secondly, the quinoline quaternary ammonium salt is mixed with squaric acid, and the mixture is subjected to azeotropic distillation and dehydration, vacuum distillation and silica gel column chromatography and recrystallization through ethanol to obtain the water-soluble quinoline squaraine dye. The dye is applied in the fields of development of novel medicines, fluorescence labeling, probes, biological immunoassay, biological immunodetection and the like. The fluorescence-emission wavelength of the water-soluble quinoline squaraine dye is near infrared, so that the water-soluble quinoline squaraine dye has superior penetrability on environments and biological tissues and reduces self absorption and background absorption, and the sensitivity of fluorescence analysis can reach 10<-10> mol / L. The preparation method is simple and easy, has low cost and good economic benefit and is suitable for industrialized production.