The invention discloses transformer-used insulation paper with a low water absorption coefficient and a small shrinking percentage. The insulation paper is prepared from, by weight, 0.6-0.7 part of a silane coupling agent kh 550, 6-8 parts of mica, 1-1.5 parts of glycine, 0.3-0.4 part of a silane coupling agent kh 570, 0.1-0.2 part of emulgator OP-10, 0.2-0.3 part of sodium dodecyl sulfate, 2-3 parts of E44 epoxy resin, 0.5-0.6 part of polyacrylamide, 500-550 parts of pulp boards, 2.8-3.4 parts of silicon carbide fibers, 1-1.5 parts of magnetization calcium, 1.2-1.5 parts of steelmaking slag powder, 3.2-3.5 parts of polyacrylonitrile fibers and a proper amount of deionized water. The preparation method of the insulation paper is simple, and the prepared insulation paper has a low water adsorption property and small shrinking percentage, is not prone to deformation, has good prospect when used for transformers, lowers potential safety hazards and is worthy of popularization.