The invention relates to a method for preparing ferrous sulfate by reducing iron mud under the induction action of solution discharge plasma, which comprises the following steps: adding iron mud into a reaction kettle, slowly adding sulfuric acid while stirring so as to dissolve the iron mud; adding an organic reducing agent or industrial waste liquor thereof into the obtained solution; transferring the obtained solution into a solution discharge plasma reactor containing a cathode and an anode; switching on the power, raising the voltage to 500-800V and the current to 5-20A, discharging to react for 20-30 minutes; filtering the solution in the reactor to remove insoluble impurities; and concentrating the filtrate to crystallize, thereby obtaining ferrous sulfate heptahydrate or ammonium ferrous sulfate hexahydrate. In the invention, the raw material has wide sources and is sufficient, and the reducing agent can be replaced by industrial organic waste liquor, thereby indirectly treating the organic waste liquor pollution; and the method can effectively recover iron atoms in the iron mud, and thus, can not result in the problems of iron mud accumulation and the like in the process.