The invention discloses a preparation method of compact small-grain YIG ceramic. The preparation method comprises the following steps: placing iron oxide and yttrium oxide powder and a proper amount of alcohol in a ball mill and carrying out wet milling to obtain slurry; placing the slurry in a thermotank and drying, and grinding in a mortar to obtain a powder; presintering the powder at high temperature of 1100-1200 DEG C; carrying out wet milling on the presintered powder to obtain slurry; drying the slurry and grinding to a powder; carrying out granulation molding on the powder to obtain a green body; eliminating PVA in the green body; and sintering the green body, rapidly heating the green body to a high temperature T1, rapidly cooling to a low temperature T2 and carrying out heat insulation for a period of time, and naturally cooling to obtain the YIG ceramic. Parameters such as compactness, crystal grain size, saturated magnetization intensity and the like of the prepared YIG ceramic are obviously better than parameters of YIG ceramic prepared by a traditional method. The YIG ceramic of the invention can meet high application requirements.