The invention relates to a biological powder fuel and a preparation method thereof. According to the invention, pods and seed coats of a reproducible perennial woody plant peony are prepared into the biological powder fuel. The preparation method comprises the steps that: (1) material selecting is carried out, wherein impurities such as sand, stone, and metal should be removed from selected raw materials; and the raw materials are boxed or bagged for layer use; (2) crushing is carried out, wherein the raw materials peony pods and seed coats are crushed in a crusher, until required particle sizes are reached; (3) material blending is carried out, wherein peony pod powder and seed coat powder are well mixed according to a certain ratio; and (4) detection is carried out, wherein each ton of the product is detected 5 times for ensuring that the particle size reaches a requirement. During the preparation process, no additive is adopted, the process is simple, and energy consumption is low. With the fuel, no harmful gas is generated during combustion, and the fuel is economical and practical. With the method, the prepared peony pod and seed coat biomass powder fuel has an average heat value of approximately 4000Kcal/kg, which is equivalent to that of medium-heat-value coal. The peony pod and seed coat biomass powder fuel assists in supplementing conventional energy shortage, and has good economic and social benefits.