The invention discloses an organic fertilizer for capsicum. The organic fertilizer is composed of the following raw materials: vermiculite, rapeseed cake, bean dregs, cassava residue, bagasse, Platycodon grandiflorum residue, radix sophorae tonkinensis residue, Rumex patientia root slag, sheep manure, cow dung, an EM microbial agent, Lobedfruit Schizocapsa Rhizome, Herba Swertiae Davidi, yunnan pholidota root, Semiaguilegia adoxoides, Radix Ginseng Rubra, panax notoginseng, Tinospora sinensis stem and cryptotaenia japonica hassk. The invention also discloses a preparation method of the organic fertilizer. The organic fertilizer for capsicum provided by the invention uses the EM microbial agent to ferment materials, can activate soil, improve gas permeability of soil, loosen hardened soil, and endow soil with strong water-retaining property. A lot of beneficial bacteria are supplemented into soil to form a protective barrier around the crop root, and can cooperate with traditional Chinese medicine ingredients to inhibit the growth of fungi, bacteria and harmful pathogenic bacteria, prevents Phytophthora cinnamomi Ronds, and maximumly alleviates soil-borne diseases. Combined use of chicken manure and cow dung provides fertility continuously for capsicum at different growth stages, thus improving capsicum yield.