The invention discloses an environmentally-friendly termite-resistant cable sheath insulating material and a preparation method thereof. The material is prepared from the following raw materials in parts by weight: 90-97 parts of chloroprene rubber (CR) 121, 15-21 parts of chlorinated polyethylene, 15-22 parts of semi-reinforcing purpose furnace black N774, 2-3 parts of magnesium oxide, 2-5 parts of glass powder, 30-35 parts of barite powder, 1-2 of anti-aging agent MB, 1-2 of N-(beta-aminoethyl)-gamma-3-aminopropyltrimethoxysilane, 0.9-1.4 of poly(1, 2-propylene glycol adipate, 5-77 parts of dioctyl maleate, 1-2 parts of accelerator DM, 0.8-1 part of dibasic lead phosphite, 12-18.4 parts of hydrotalcite, 1-3 parts of 4, 4'-oxybis(benzenesulfonyl hydrazide), 2-4 parts of antioxidant DSTP, 4-6 parts of glass powder, 0.8-1 part of zinc oxide, 2-3 parts of modified calcium carbonate, 5-6 parts of antimony oxide, 3-5 parts of ethylene thiourea and 0.8-1 part of modified bentonite. The produced environmentally-friendly termite-resistant cable sheath insulating material has excellent physical performance, stable dimensions and low shrinkage factor, and the tensile strength, tear resistance and elastic force performance of a product are all greatly improved.