The invention discloses an LED chip with an ITO thin film structure and a preparation method of the LED chip, and belongs to the field of semiconductor light-emitting diodes. The method comprises the following steps: firstly, fabricating an epitaxial wafer of the light-emitting diode; fabricating a patterned dielectric film layer on the epitaxial wafer and fabricating the patterned ITO thin film layer and p-GaP window layer in an etching manner; and fabricating a metal electrode layer on the patterned ITO thin film layer and p-GaP window layer. The metal electrode layer comprises a main electrode and an extended electrode. The patterned ITO thin film layer and p-GaP window layer are adopted as contact layers; and the main electrode as a bonding pad is connected to the p-GaP window layer; and the extended electrode is connected to the ITO thin film layer. The adhesiveness of the overall metal electrode layer is improved; a stable working voltage of a light-emitting device is ensured; the bonding wire reliability of a product is improved; and the quality and the yield of the product are greatly improved.