The invention discloses a coal-water slurry fuel and a preparation method thereof. The coal-water slurry fuel includes components of charcoal, water and additives, wherein the additives comprise a dispersant and a stabilizing agent. The preparation method for the coal-water slurry fuel comprises a first step of performing hydro-thermal charing to the raw material biomass to get a mixture of the charcoal and water, and a second step of adding the additives to the mixture of the charcoal and water to obtain a crude product of the coal-water slurry fuel. According to the invention, the biomass, especially the agriculture residue, is used as a raw material to preparing the novel coal-water fuel which has the properties of environmental protection, high caloric value, and large caloric power. The preparation method for the fuel is low in energy consumption, economical and cheap, and easy for operation. The coal-water slurry product has low sulfur content, and has the advantages of few black smoke, big fire, full burning, no flying ash, clean burning, etc. in use.