The invention relates to toy clay and a preparation method thereof. The toy clay comprises the following components in percentage by weight: 15 to 20 percent of viscous bentonite, 20 to 25 percent of medical stone powder, 20 to 25 percent of kaolin, 0.8 to 1 percent of Vc, 2 to 3 percent of cellulose, 0.1 to 0.2 percent of bamboo extract preservative and the balance of water. The toy clay has the prominent characteristics that: the toy clay is low-carbon, non-toxic and pollution-free, the dried played clay can be put into a flowerpot to form nutrient soil, and certain humus is added into the clay to plant flowers, grass and the like. The toy clay does not stick hands, and has the advantages of good handfeel, exquisiteness, smoothness, strong temperature difference adaptability and low cost. Through test, the toy clay meets the prescription of GB6675-86 China's Toy Safety Standards. The toy clay can be used as a toy of infants and pupils such as interesting patch clay bubbles, and also can be used on the aspects of teaching aid, model manufacture, sculptural draft, mold test type and the like.