The invention discloses a preparation method of 4-(5-amino-6-hydroxy-2-benzoxazolyl) benzoic acid (ABA), which comprises the following steps of: using 4-(5-nitro-6-hydroxy-2-benzoxazolyl) methyl benzoate shown by a formula (I) as a raw material, firstly conducting ester group hydrolysis and then conducting nitro reduction to obtain the ABA shown by a formula (IV), or firstly conducting nitro reduction and then conducting ester group hydrolysis to obtain the ABA shown by the formula (IV), wherein hydrazine hydrate is used as reducing agent and Fe<2+>/C or Fe<3+>/C is used as catalyst during reduction, the catalyst Fe<2+>/C is a catalyst system consisting of ferrous salt and activated carbon and the catalyst Fe<3+>/C is a catalyst system consisting of ferric salt and activated carbon. The ABA prepared by adopting the method does not generate any harmful gas and cause any interference during preparation of PBO (cis-poly (p-phenylene-2, 6-benzobisoxazole)) through polycondensation, does not contain organic polymerization inhibiting impurities DMF (dimethyl formamide) and contains metal ions with content being low.