The invention discloses a magnesium alloy with zinc and nickel compound plating layers and a preparation method thereof. A zinc plating layer of the magnesium alloy is taken as a bottom layer with the width between 20 microns and 25 microns, a nickel plating layer is taken as a surface layer, and the total width of the zinc plating layer and the nickel plating layer is less than or equal to 40 microns. The method comprises the following steps: firstly, plating preliminary treatment, i.e. zinc is activated in an acid solution and then soaked in sulphate; secondly, zinc electrodeposition, i.e. after the zinc is soaked in the sulphate in the first step, the zinc layer of the magnesium alloy is electrodeposited; thirdly, nickel bright plating, i.e. the magnesium alloy which is nicely processed in the second step is brightly plated with nickel in a nickel plating solution; fourthly, sodium silicate water solution sealing. With the method, the obtained zinc plating layer is nicely combined with a base body, has uniform width and high corrosion resistance, can be taken as a protective plating layer to be singly used and can be also taken as a transition layer to carry out plating or chemical plating or other protective or decorative platings, and the nickel plating layer obtained from the zinc plating layer by plating is nicely combined with the zinc plating layer and is uniform, exquisite, bright and beautiful.