The invention relates to a preparation method of a silver ferric oxide electrical contact material, which comprises the following steps: preparing a certain concentration of mixed solution of silver nitrate, ferric nitrate and zirconium oxynitrate; preparing a certain concentration of precipitating agent solution; mixing the two solutions at certain speed and preparing composite powder by codeposition reaction; vacuum-filtrating, cleaning, drying, calcining and sieving the composite powder to prepare the silver ferric oxide composite powder; carrying out cold isostatic pressed forming and processing into ingot blanks; and carrying out sintering, hot extrusion, drawing (or rolling ) and annealing, and processing into wire rods (or sheet rods). The silver ferric oxide electrical contact material prepared by the method has the advantages that: the distribution of silver oxide particles in a silver matrix is uniform, oxide particles are fine, and the dispersion strengthening effect is obvious.