The invention relates to a preparation process and a device of sponge iron, belonging to metallurgical industry steel-making raw material. The process comprises the following steps: mixing iron-containing raw materials with reducing agent, solvent and catalyst to prepare ultra fine powder, passivating and mixing to make pelletizing materials, sending the prepared pelletizing materials into a reducing furnace, drying and roasting, and obtaining sponge iron after the reduction reaction. The reducing device is connected with an upper furnace above a furnace base, a lower furnace body is connected to the downside of the furnace base, the upper end of the upper furnace body is connected with an upper furnace mantle, a drying bed grate is positioned at the upper end in the upper furnace body, a purifying device is connected with the upper furnace body and the lower furnace body through pipelines, and a residual heat circulating device is connected with the lower furnace body. The invention has the advantages that: firstly, the reduction temperature is reduced, the reduction speed is increased, the energy consumption is reduced, the production cost is lowered, the production efficiency is improved, and the uniformity of the quality is ensured; secondly, the degree of mechanization is high, the procedure is simple, the yield is large, the mass production can be performed; thirdly, the waste of raw materials is lowered, the environment pollution is reduced; and fourthly, the waste resource can be recycled so as to save the resource consumption.