The invention discloses a method for performing insulating treatment on metal magnetic powder and preparing metal magnetic powder. The method comprises the following steps: reacting phosphoric acid and boric acid on the surface of metal magnetic powder, generating and absorbing a layer of phosphate and borate on the surface of the metal magnetic powder to obtain required B and P diffusion sources; under a vacuum atmosphere, performing diffusion reaction, diffusing B and P elements on the surface of the metal magnetic powder to inner part of the metal, and forming a metal gap compound containing B or P below a metal magnetic powder phosphate and borate coating layer after penetrating B and P on the surface of the metal magnetic powder. The metal gap compound and the boric acid left outside the magnetic powder have low melting point, are changed to be liquid at a high temperature to achieve the effects of an inorganic binder. The method has the beneficial effects of improving the insulation of the metal magnetic powder surface, and improving the resistance of the metal magnetic powder particles and the contact resistance of the magnetic powder; inorganic binding coater is adopted to directly form, so that the cost is reduced, the magnetic core strength is improved, and the atmospheric pollution is avoided.