The invention provides a water erasable fading artistic oil painting stick and a preparation method thereof. The water erasable fading artistic oil painting stick comprises the following components by weight: 23-51 parts of organic wax substrate, 12-30 parts of inorganic mineral filler, and 5-15 parts of environmentally friendly degradable pigment, wherein the organic wax substrate comprises wax, oil, grease, and a conditioning agent, the filler comprises a basic filler and a functional filler, and the environmentally friendly degradable pigment comprises a color former and a color developing agent. The water erasable fading artistic oil painting stick overcomes the defects that the water erasable fading crayon for children is high in hardness, is not smooth to write with, and is not favorable for use by the children, has the characteristics of high coloring power and excellent smoothness, is safe and environmentally friendly, does not contain heavy metals, and fades without traces after being erased with water; meanwhile, the artistic oil painting stick fades without traces after being erased with water, does not cause dust pollution, can be used for scribbling by the children, and can also be used writing in whiteboard teaching. The production process is simple, and the water erasable fading artistic oil painting stick is easy to produce in batches.