The invention relates to a special steel with hard exterior and tough interior and manufacture method thereof, the special steel is obtained by casting two kinds of molten steel with different carbon contents together to form a core portion, an intermediate layer and an outer layer, the carbon content of the outer layer is greater than that of the core portion; the intermediate layer is formed by contacting two kinds of molten steel with different carbon contents naturally; the hardness of the outer layer is greater than that of the core portion. The invention also provides a preparation method of the special steel. The special steel which has a performance of hard exterior and tough interior can be used in the manufacture of various hard-exterior and tough-interior cutters and gears directly, the subsequent processes such as carburizing and nitriding of gear can be omitted and production costs are reduced; the conventional casting and die casting equipment is used in the preparation methods and the casting process is simple.