The invention discloses a multifunctional soil improvement regulator and a preparation method thereof. The multifunctional soil improvement regulator is characterized in that: organic wastes comprising bagasse and waste bacteria subjected to piling fermentation treatment are compounded with polyacrylamide macromolecular compound and modified chitosan to obtain the multifunctional soil improvement regulator for killing and inhibiting bacteria, holding water and fertilizer, improving soil structure, improving soil permeability and the like. The preparation method comprises the following steps of: (1) performing fermentation treatment of the organic wastes, namely pre-airing bagasse and waste bacteria bags, controlling nitrogen fertilizer to be between 0.5 and 5 percent, controlling moisture to be between 50 and 70 percent, and performing natural piling fermentation to keep the ratio of C to N at 20 to 50 respectively; and (2) mixing the fermented organic wastes, 0.1 to 1 percent modified chitosan solution and polyacrylamide in a mass ratio of 1:0.5-5:0.01-0.05 to obtain a product.