The invention relates to a halogen-free flame retardant thermally conductive and insulating resin composition and a preparation method thereof. The composition is prepared from polyphenylene sulfide, functional filler, nylon resin, flame retardants, toughening agent, nucleating agent, antioxidants, lubricating agent, compatilizer and coupling agents. The composition maintains the rigidity of polyphenylene sulfide while toughening polyphenylene sulfide, and is endowed with the characteristic of halogen-free flame retardance so as to achieve the aims of thermal conduction and insulation, thus solving the problem that the toughness, halogen-free flame retardance and thermal conductivity and insulativity of existing polyphenylene sulfide compositions can not meet the requirements. The composition is successfully developed and can be widely applied to the processing fields such as electronics and electricity, electronic packaging, auto parts and the like. The property indexes of the composition meet the requirement of the market for high quality of the raw materials.