The invention relates to a trace element water-soluble fertilizer and a preparation method thereof, which are applied in the field of agriculture and forestry production. The trace element water-soluble fertilizer is characterized by comprising the following components in percentage by weight: 13 to 20 percent of ammonium carbonate, 8 to 10 percent of monopotassium phosphate, 19 to 35 percent of potassium sulfate, 15 to 33 percent of ferrous sulfate, 1.5 to 2.0 percent of copper sulfate, 1.9 to 2.5 percent of zinc sulfate, 1.6 to 1.9 percent of manganese sulfate, 2.3 to 2.6 percent of boric acid, 0.1 to 0.2 percent of sodium molybdate, 13 to 17 percent of magnesium sulfate, 1.5 to 2.0 percent of pericarpium juglandis, 2.0 to 2.5 percent of rhubarb, 1.5 to 1.8 percent of fineleaf schizonepeta herb and 1.0 to 1.4 percent of peganum harmala. The preparation method comprises the following steps of: 1, evaporating and dehydrating the ammonium carbonate, monopotassium phosphate, potassium sulfate, ferrous sulfate, copper sulfate, zinc sulfate, manganese sulfate, boric acid, sodium molybdate and magnesium sulfate at the temperature of between 110 and 180 DEG C respectively to keep the water content below 1.5 percent, and crushing the components into fine powder respectively; 2, crushing the pericarpium juglandis, rhubarb, fineleaf schizonepeta herb and the peganum harmala into fine powder, boiling the fine powder for 1 to 2 hours by adding water, squeezing the mixture, and taking juice to form Chinese medicinal juice; and 3, mixing the treated raw materials in a ratio, and winnowing and crushing the mixture to obtain the trace element water-soluble fertilizer.