The invention discloses fine grinding fluid for a sapphire substrate and a preparation method thereof; the fine grinding fluid comprises diamond powder, water and a suspending liquid, wherein the weight ratio of the diamond powder to the water to the suspending liquid is 1:10:1; the suspending liquid comprises a dispersing agent, a suspending agent and an antirusting agent, wherein the weight ratio of the dispersing agent to the suspending agent to the antirusting agent is 2:5:1; the dispersing agent is macromolecule organic alcohol; the suspending agent is a macromolecule compound; and the antirusting agent is alkali. Due to the adoption of the technical scheme, the obtained fine grinding fluid has good degree of uniformity and is beneficial to grinding so that the roughness of the surface of a machined wafer is greatly improved, turned down edges are reduced, the machining efficiency is greatly increased and the evenness of a wafer is greatly increased.