The invention discloses a mercapto-peptide, a preparation method and applications thereof, and belongs to the technical field of protein waste treatment and utilization. The mercapto-peptide is water soluble, the average molecular weight is 3000 to 20000 daltons, and nitrogen accounts for 12.0 to 14.0 wt% of mercapto-peptide. According to the preparation method, a proper amount of potassium hydroxide and water is added into protein wastes especially protein containing animal leftovers, which contain a large amount of disulfide bonds, such as feathers, quills, hoofs, horns, hairs, blood, and the like; and then reactions are carried out at a constant temperature of 70 to 186 DEG C for 0.5 to 40 hours so as to obtain the mercapto-peptide. The produced water-soluble mercapto-peptide can be used as an in-situ passivating agent to passivate heavy metal ions (cadmium, lead, copper, zinc, arsenic, alum, mercury, etc.) in soil, the effective state concentration of heavy metal ions in soil can be reduced, and thus the heavy metal content of planted crops becomes qualified. Furthermore, the mercapto-peptide can be used as a base fertilizer and topdressing, and is capable of promoting the degradation of organic substances in soil, improving the fertilizing effect, and promoting the growth of plants.