The invention belongs to the technical field of solar batteries, in particular to an insulated layer of a solar battery and a preparation method thereof. An Er2O3 insulated layer is prepared on a stainless steel foil substrate by using vapor as reaction gas and adopting a reactive sputtering method. The preparation method comprises the following concrete steps: installing a target, and adjusting the distance between the target and the substrate; vacuumizing until the degree of vacuum is no more than 3.0*10<-3> Pa, and heating the substrate to 600-700 DEG C; introducing argon gas and vapor, and adjusting the air pressure to 0.1-0.8 Pa, wherein the partial pressure of water is 0.01-0.04 Pa; and increasing the sputtering power to 80-100 W, and after glow is stable, depositing for 20-40 min to obtain the Er2O3 insulated layer. By adopting the reactive sputtering method, the sputtering efficiency is improved; and by adopting vapor as the reaction gas, the oxidation of the surface of the target and the stainless steel foil is prevented, and the controllability of the deposition rate is improved. The invention can meet the requirement of industrial preparation, and the prepared Er2O3 insulated layer can be better crystallized.