The invention discloses a cholesterol lowering peptide with a casein source as well as a preparation method and application of the cholesterol lowering peptide. The cholesterol lowering peptide comprises the following amino acid sequences: SEQ ID NO:1 and SEQ ID NO:2. The peptide is prepared by the steps: hydrolyzing casein through protease so as to obtain enzymatic hydrolysate; performing ultrafiltration, chromatographic separation and ultra-high performance liquid chromatography mass spectrometry on the enzymatic hydrolysate so as to obtain a polypeptide sequence, synthesizing the polypeptide, and verifying the cholesterol lowering activity, thereby obtaining the product. The cholesterol lowering peptide with the casein source comes from cow's milk; a crude cholesterol lowering peptide obtained through gel filtration chromatography in the method disclosed by the invention does not need to be subjected to liquid chromatography separation, the amino acid sequences of the cholesterol lowering peptide are directly analyzed by adopting ultra-high performance liquid chromatography mass spectrometry (UPLC-MS) analysis, the cholesterol lowering peptide is synthesized so as to further verify the cholesterol lowering activity, the sequence of the cholesterol lowering peptide is determined, and the efficiency is improved; moreover, the cholesterol lowering peptide with the casein source disclosed by the invention can be used for preparing functional foods, so that the absorption of exogenous cholesterol is inhibited.