The invention discloses a metal cutting emulsion prepared from coarse tall oil residues and a preparation method thereof. The preparation method comprises the following steps: (1) neutralizing coarse tall oil residues; (2) separating coarse tall oil from the residues; (3) preparing coarse tall oil amide; (4) preparing metal cutting emulsion from coarse tall oil amide and other components. The tall oil amide obtained by the method mentioned above is compounded with base oil, a stabilizing agent, an antifoaming agent, a bactericide, an emulsifying agent, and deionized water according to a certain ratio, and then the mixture is emulsified to obtain stable metal cutting emulsion. The metal cutting emulsion prepared from coarse tall oil residues is subjected to anticorrosion performance and antirust performance detections that meet the national standards. The anticorrosion performance reaches the national B standard, and the antirust performance reaches the national A standard. The method has the advantages that the operation is convenient and simple, the environment is protected, the discharge of wastes is reduced, at the same time, the profits of enterprises are increased, and the cost is reduced.