The invention provides a rare earth aluminum alloy conductor and a preparation method thereof. The rare earth aluminum alloy conductor comprises the following components in percentage by weight: 0.5-1% of Fe, 0.07-0.1% of Zn, 0.05-0.1% of Si, 0.02-0.04% of Sb, 0.02-0.05% of Sn, 0.15-0.30% of Cu, 0.01-0.02% of Sr, 0.01-0.03% of Te, 0.03-0.05% of rare earth and the balance of aluminum and inevitable impurities. The rare earth aluminum alloy conductor provided by the invention is excellent in electric property and can be used for producing a cable.