The invention discloses polyaniline coated composite powder and a preparation method thereof. The composite powder comprises three parts, namely a core layer made of a carbon material, an interlayer made of monomer iron nano particles and iron nitride, and a coating layer made of a polyaniline thin film. The preparation method comprises the following synthesis steps: allowing the carbon material to fully absorb solution of ferric nitrate, and coating the monomer iron particles and the iron nitrate by hydrogen reduction and amination respectively; and finally, coating the polyaniline on the outside layer of the product of the amination by using in-situ polymerization technology, and thus obtaining the polyaniline coated composite powder. The powder has both the conductive and anticorrosionperformance of the polyaniline and the magnetic and catalytic performance of iron magnetic particles; the raw materials of the composite powder are widely available and the process flow of the composite powder is simple; and the composite powder has a bright application prospect in fields of electromagnetic wave shielding, metal corrosion resistance, treatment of refractory waste water, plastic rubber additive and the like.