The invention provides waterborne polyurethane decorative leather and a manufacturing method thereof. The manufacturing method includes the steps of 1), performing base cloth treatment; 2), coating; 3), agglomerating; 4), conducting washing and drying, namely removing residual solidification liquid on the base cloth through a washing trough, drying and setting so as to obtain waterborne polyurethane decorative leather base; 5), conducting dry-process direct coating, namely applying the waterborne polyurethane decorative leather base with waterborne direct coating topcoat slurry and drying; 6), subjecting the waterborne polyurethane decorative leather base obtained after dry-process direct coating to high-temperature embossing to shape surface effect grain so as to obtain the waterborne polyurethane decorative leather. The manufacturing method has the advantage that the waterborne polyurethane resin slurry and a waterborne environment-friendly auxiliary are used for enabling the decorative leather to be free of organic solvents during preparation and use, so that the problems of contamination and residues of solvent-type decorative leather are solved. The waterborne polyurethane decorative leather has the advantages of compact structure, less proneness to cracking and wear and flexibility in hand feel and can meet the demands of existing market on the decorative leather completely.