The invention discloses a woollen fabric having hand feeling and gloss as cashmere and a preparation method thereof. The preparation method includes: chlorinating the woollen fabric with a chlorinating agent; reducing the chlorinated woollen fabric with a reducing agent; alkaline-washing the woollen fabric after the reduction; adding acid to the alkaline-washed woollen fabric for neutralization, and performing softening wet-brushing on a wet-brushing machine. Through the steps of chlorination, reductive cleaning, alkaline washing, neutralization and wet brushing, degraded proteins in a scale layer of denuded wool fibers are removed, so that the fabric has smooth and flat surface and can regularly reflect light beam and shows gloss; therefore, the woollen fabric has a soft hand feeling andis improved in gloss, has an anti-shrinking effect, can solve problems of itching feeling, stiffness, roughness and the like, and has the feeling and gloss as pure cashmere.