The invention provides a rare earth composite compound containing a rare earth hydroxide and a rare earth carbonate and a preparation method thereof. The rare earth composite compound contains the rare earth hydroxide and the rare earth carbonate, based on the molar amount of rare earth oxides, the molar ratio of the rare earth hydroxide accounts for 30%-95% of the total amount of rare earths in the rare earth composite compound, and the molar ratio of the rare earth carbonate accounts for 70%-5% of the total amount of the rare earths in the rare earth composite compound. The preparation method comprises the steps: simultaneously or successively adding step by step a first precipitating agent containing calcium and/or magnesium alkaline compounds and a second precipitating agent containing carbonate and/or bicarbonate of at least one element of ammonium, sodium and potassium into a rare earth salt solution, and then carrying out solid-liquid separation after rare earth precipitation in the rare earth salt solution, to obtain the rare earth composite compound. The obtained rare earth composite compound has high content of the rare earths, has good filtering performance, is easily dissolved by acids, and has the amount of the dissolved acid reduced.