The invention provides a lightweight fine grain titanium fiber pumice magnesium alloy composite material and a preparation method thereof. The composite material has high strength and excellent damping performance. The method has simple process and low production cost and is suitable for industrial production. The composite material takes magnesium alloy as a substrate on which fine grain titanium fibers and pumice particles are distributed, the size of grains of the fine grain titanium fibers is 1-10 mu m, the fine grain titanium fibers and the pumice particles account for 45-55% of the composite material by volume, and the weight ratio of the fine grain titanium fibers to the pumice particles is 1:1. The magnesium alloy substrate comprises the following chemical components in percentageby weight: 4%-8% of Al, 0.01%-0.05% of Gd, 0.01%-0.05% of Gr, 0.001%-0.005% of Mo, 0.03%-0.09% of Si, 0.003%-0.009% of V, 0.003%-0.09% of Sn and the balance Mg.