The embodiment of the invention discloses a coated fertilizer for improving heavy metal contaminated soil and a preparation method thereof, and particularly relates to the field of fertilizers. The raw materials (in parts by weight) comprise 50-60 parts of base fertilizer, 8-12 parts of ground phosphate rock, 12-16 parts of seaweed powder, 6-10 parts of alginic acid, 6-10 parts of metal binding protein, 18-22 parts of coco coir, 6-10 parts of chitosan resin, 8-12 parts of activated carbon particles, 6-10 parts of linseed oil, and the balance of water. The preparation method comprises the following steps: mixing soaked and softened coco coir with a base fertilizer to form a new base fertilizer, then preparing coating slurry from ground phosphate rock, seaweed powder, alginic acid, metal binding protein, chitosan resin, activated carbon particles, residual coco coir and water, and finally coating, cooling and granulating the base fertilizer for multiple times by adopting the coating slurry. The coated fertilizer is slow in release and long in acting time, the fertility degree of soil can be effectively improved, and heavy metal in the soil can be well adsorbed and passivated.