The invention discloses a rare earth magnesium zirconium alloy. The rare earth magnesium zirconium alloy is characterized by comprising the following chemical components in percentage by mass: 0.1-5% of zirconium, 1-20% of rare earth, and the balance of magnesium. The invention further discloses a preparation method of the rare earth magnesium zirconium alloy. The prepared rare earth magnesium zirconium alloy is excellent in strength, plasticity and creep resistance, is excellent in corrosion resistance to multiple acid, alkali and salt, and can be recycled.