The invention relates to a transparent conducting oxide thin film, in particular to preparation equipment of the transparent conducting oxide thin film and a method thereof. The preparation equipment comprises a closed reaction chamber with a vacuum-pumping system and an air inlet system; wherein, a base plate frame capable of moving or rotating is arranged inside the closed reaction chamber, furnished with a heater, a baffle and a sputtering source arranged opposite to the base plate frame. The difference lies in that an oxygen ion source is arranged between the substrate frame and the sputtering source. The centric angles of the oxygen ion source and the base plate frame are adjustable within the range from 0 degree to 180 degrees. In the invention, reactive plasma oxygen is used as a reactant replacing the oxygen, thus greatly reducing the probability of anode disappearing and cathode poisoning and the frequency of arc starting and enhancing the operating stability of the system. In addition, the structure is simple, the manufacturing cost and the operation and maintenance cost is low.