The invention provides a bimetallic oxide catalyst for removing hydrogen in CO gas and a preparation method of the bimetallic oxide catalyst. The catalyst is prepared by taking aluminum oxide as a carrier, taking palladium oxide as an active component and taking rare earth elements as auxiliaries, wherein the doping quantity of the rare earth elements accounts for 0.1%-20% of the mass of the catalyst, and the loading quantity of palladium accounts for 0.1%-5.0% of the mass of the catalyst. The catalyst is prepared through a step-by-step impregnation method which comprises the steps that the aluminum oxide carrier is impregnated with a rare earth salt solution and an active component solution step by step, and then drying and roasting are performed. According to the catalyst, the rare earth elements are doped to serve as the auxiliaries, therefore, the using amount of precious metal is decreased, the selectivity of O2 to H2 is improved, the CO dissipation is reduced, and H2 in the CO gas can be removed to be 100 ppm or below under the mild reaction condition.