The invention discloses an in-situ fiber-forming toughened regenerated polystyrene material which is characterized by comprising the following components by weight percent: (1) 50-80% of regenerated polystyrene, (2) 10-40% of regenerated polyester, (3) 1-10% of regenerated copolyester, (4) 1-10% of compatilizer, (5) 1-10% of toughening agent, (6) 0.1-1% of antioxidant and (7) 0.1-1% of lubricating agent. A preparation method comprises the following steps: uniformly mixing the components in proportion in a high mixing machine, and then performing double screw melt extrusion, wherein the double screw extrusion temperature is as follows: the temperature of a melting section is at 80-200 DEG C, the temperature of a mixing section is at 180-240 DEG C, the temperature of a metering section is at 200-240 DEG C, and the temperature of a mould head is at 200-240 DEG C; cooling after extruding; and cutting into grains, thereby obtaining high-toughness regenerated polystyrene grains. The preparation method has the advantages that: 1) the compatilizer, the toughening agent and the antioxidant are added and an in-situ fiber-forming technology is utilized to greatly increase the toughness of the regenerated polystyrene under the condition that other use properties are unaffected, and 2) the problem of compatibility between thermoplastic plastic impurities and polystyrene is solved.