An environment-friendly brass alloy dedicated to drinking water transport and distribution is prepared from the following components by weight: 57 to 65 percent of Cu, 0.4 to 1.6 percent of Bi, 0.09 to 1.0 percent of Sn, 0.01 to 0.5 percent of Ni, 0.1-1.0 percent of Al, 0.05-1.0 percent of Mg, less than 0.2 percent of Fe, less than 0.01 percent of Pb, less than 0.3 percent of impurities, and the balance of Zn. A preparation method of the environment-friendly brass alloy comprises the following steps: mixing, smelting, casting, extrusion, pickling, stretching, straightening and finished heat treatment, wherein in the mixing and smelting steps, electrolytic copper, tin bronze, bismuth brass, electrolytic nickel, zinc ingots, tin ingots, aluminum ingots and magnesium ingots added in percentage by weight into an industrial frequency furnace in sequence for smelting. When the environment-friendly brass alloy is in contact with water, the quantity of precipitated metal is low and meets all index requirements specified in Standard for Hygienic Safety Evaluation of Equipment and Protective Materials in Drinking Water, and the environment-friendly brass alloy is more suitable for preparation of transport and distribution equipment and protective materials applied to drinking water. A constitution diagram shows that the environment-friendly brass alloy is relatively uniform in texture and takes the shapes of balls; the environment-friendly brass alloy has good machinability and corrosion resistance; and inhibiting of the precipitation quantity of metal such as zinc and lead in the alloy is facilitated.