The invention provides an environment-friendly decorative film and a preparation method thereof. The preparation method comprises the following steps of performing fitting and embossing treatment on a film to form an embossed layer; and performing valley dyeing on the embossed layer by water-based ink to form the environment-friendly decorative film. According to the method disclosed by the invention, water-based ink which is free of pollution on environment and is good in environment friendliness is adopted to replace oil-based ink in the prior art to perform valley dyeing treatment, so that the environment-friendly effect of the prepared decorative film is improved, and definition and three-dimensional visual effect of the patterns on the surface of the decorative film are improved.