The invention discloses a hard alloy using an iron-aluminum intermetallic compound as a bonding phase and a preparation method thereof. The hard phase is carbide, and the bonding phase is 10 to 40 volume percent of FeAl or Fe3Al. The preparation method comprises the following steps of: ball-milling and mixing 1.69 to 19.09 mass percent or 1.31 to 13.75 mass percent of pre-alloying powder of Fe2Al5, 2.10 to 23.78 mass percent or 3.23 to 33.81 mass percent of iron powder and the balance of carbide powder based on the component of FeAl or Fe3Al for 18 to 36 hours, preparing the obtained ball-milling mixture into uniform mixture powder by spray drying, pressing the mixture powder to form a blank, preserving the heat for 1 to 2 hours at the temperature of 1,200 +/- 20 DEG C under the vacuum condition during sintering the pressed blank, and then performing low-pressure liquid phase sintering at the temperature of between 1,250 and 1,550 DEG C to obtain the hard alloy using the FeAl or the Fe3Al as the bonding phase, wherein the FeAl or the Fe3Al is 10 to 40 volume percent. The preparation method has simple process and is low in manufacturing cost; holes are difficult to form in the liquid phase sintering process or are small; and the obtained hard alloy has high strength, good abrasion resistance and excellent high-temperature oxidation resistance and sulfur corrosion resistance.