The invention discloses a preparation method of an Al2Y particle reinforced magnesium matrix composite. The preparation method is characterized in that the method comprises the steps that an Mg-Al-Mn-Zn alloy is added to a crucible in a smelting furnace with smelting temperature of 700 DEG C; heat preservation is conducted for 10min after the alloy is molten; furnace temperature is adjusted to 800-850 DEG C; SF6 and CO2 mixed gas is supplied for protection in a smelting process; an Mg-Y intermediate alloy containing 30% of Y by mass fraction is added to a melt; the addition amount of the Mg-Y intermediate alloy is 7-10% of the mass of the melt; a power supply of the smelting furnace is turned off; an ultrasonic amplitude transformer probe is placed into the melt; the depth of the amplitude transformer probe into the melt is approximately 10mm; and the melt is subjected to ultrasonic treatment, standing, deslagging, rapid cooling to 740 DEG C, and then casting. Particles of Al2Y in the composite prepared by the preparation method are small and distributed uniformly; beta phase Mg17Al12 in a structure of the composite is changed from a continuous state to a discontinuous state or a particle state; grains are diminished; a microscopic structure of the composite is obviously refined; and the property of the composite is improved relative to a matrix material.