The invention provides heat-resisting steel and a preparation method thereof. The method comprises the steps of mixing a first part by mass of Fe with C, Si, Mn, Cr, Ni, Mo, S and P, and smelting so as to obtain liquid steel; and covering a second part by mass of Fe on the surface of rare earth, pouring the liquid steel, and standing, thereby obtaining the heat-resisting steel, wherein the particle diameter of the rare earth is nano-scale and / or micron-scale. Compared with the prior art, the method has the advantages that the rare earth with the nano-scale or micron-scale particle diameter is adopted to modify the heat-resisting steel, the surface activation energy of the nano-scale and / or micron-scale rare earth is higher, the surface of the rare earth is covered by iron powder, and then, the liquid steel is added, so that the rare earth can be isolated from the air, the time of contact between the rare earth and the liquid steel is shortened, the oxidation burning loss is reduced, then, the modification effect of a rare-earth element on the heat-resisting steel is improved, basic crystal grains of the microstructure of the heat-resisting steel are refined and have the effect of refined crystal grains, meanwhile, the high-temperature elongation percentage of the heat-resisting steel can be increased, and the oxidation resistance of the heat-resisting steel is improved.