The invention relates to an aqueous polyurethane dispersion composition with formaldehyde reactivity as well as a preparation method and application of the aqueous polyurethane dispersion composition. The composition comprises 12wt%-72wt% of polyurethane copolymer based on the total weight of the composition, wherein the weight ratio of the polyurethane to the acrylic ester copolymer is within a range of 1:15 to 15:1 in terms of the solids; the composition is obtained by forming aqueous polyurethane dispersion containing the acrylic ester copolymer through free radical polymerization reaction to one or more acrylic monomers and other optional vinyl compound monomers during the preparation process of the aqueous polyurethane dispersion. The aqueous polyurethane dispersion composition with formaldehyde reactivity disclosed by the invention is applied to the surface coating fields including wood wares, synthetic leathers, papers, fabrics, printing ink paint, adhesives and the like, and preferably applied to the surface coating fields including wood wares, synthetic leathers, fabric paints, adhesives and the like.