The invention provides a preparation method of hydroxyl modified poly-p-phenylene benzo imidazolinyl resin and application of the resin in high performance fiber preparation. 1,2,4,5-tetraaminobenzene hydrochloride and two hydroxy terephthalic acid are utilized as raw materials, hydrogen chloride is desorbed from polyphosphoric acid, and the hydroxyl modified resin is prepared by temperature programming mixed with polycondensation. The resin can be applied to spinning processing and made into high performance fiber, particularly poly-1, 4-(2, 5-dyhydroxy) phenylene-2, 6-benzo diimidazole resin can directly utilize poly phosphoric acid liquid crystal basic solution when polymerization is finished to conduct manual wire drawing or dry-jet wet spinning to obtain poly-1, 4-(2, 5-dyhydroxy) phenylene-2, 6-benzo diimidazole fiber, compression and composite adhesive performance of the fiber are improved, and production cost is reduced. The preparation method and the application provide a new way for replacing PBO and M5 fiber to implement commercialization production of the high-performance fiber and developing research direction of high-technology materials.