The invention relates to a heat-conductive magnesium alloy and a preparation method thereof, the heat-conductive magnesium comprises the component contents of: 1.5-11wt percent of Zn, 0.5-5wt percent of Cu, 0.15-1wt percent of Mn, 0.1-2.5wt percent of Ag, the rest component is Mg. Pure Mg ingot, pure Zn ingot, electrolytic copper and electrolytic manganese or master alloy Cu-Mn are used as raw materials and pure Mg ingot is smelted and alloyed; after castings are made, then solid dissolving treatment and aging treatment are performed; or after making billet, homogenization thermal treatment is the next step; sheet metal, tube, profile, rod, wire or other casting are made by adopting the technologies of rolling, extrusion, drawing, forging or distortion process, then the aging treatment is carried out. The magnesium alloy of the invention, at the temperature of 20 DEG C, has thermal conductivity rate of above 120W. (m.K)-1, tensile strength of above 340 Mpa and yielding strength of above 320 Mpa. The invention can be used as structure material for a heat radiation system of a power supply and an electric device in aviation and aerospace.