The invention relates to alkaline magnesium oxysulfate cement and a preparation method thereof. The alkaline magnesium oxysulfate cement is prepared from magnesium oxide, magnesium sulfate heptah, coal ash, core additives and water, wherein the core additives include a first core additive and a second core additive, and the first core additive is inorganic acid, and the second core additive is organic acid. The preparation method includes the steps: (1) dissolving the magnesium sulfate heptah in the water to prepare magnesium sulfate heptah solution; (2) weighing raw materials according to ratio; (3) adding the first core additive into the magnesium sulfate heptah solution; (4) sequentially adding the second core additive and the coal ash into the magnesium oxide, uniformly stirring the raw materials, adding the mixture into the magnesium sulfate heptah solution obtained in the step (3), and uniformly stirring the mixture and the solution to form cement paste. The completely hydrated alkaline magnesium oxysulfate cement is prepared, the hydrated phase of the magnesium oxysulfate cement is improved by leading in the core additives, a novel insoluble crystal whisker hydrated phase is generated, and further the strength, the flexibility and the water resistance of the novel insoluble crystal whisker hydrated phase are obviously superior to those of the magnesium oxysulfate cement.