The invention belongs to the technical field of packaging materials and discloses an environment-friendly water-soluble polyvinyl alcohol packaging film and a preparation method thereof. The packaging film is prepared from the following components in parts by weight: 100 parts of polyvinyl alcohol resin, 5-30 parts of oxidized starch, 5-30 parts of a plasticizer, 1-10 parts of an enhancer, 1-3 parts of a surfactant and 0.05-2 parts of a defoaming agent, wherein the plasticizer is a compound plasticizer which is prepared by compounding glycerin with other plasticizers and contains at least one combination of glycerin/polyglycerin, glycerin/polyethylene glycol 200, glycerin/polyethylene glycol 400, glycerin/polyethylene glycol 600, glycerin/diethylene glycol and glycerin/triethylene glycol. The packaging film can be rapidly completely dissolved into water at the room temperature, is transparent, colorless and toxic-free after being dissolved, is biodegradable, has excellent mechanical properties and can be applied to water-soluble product packages such as pesticides, detergents and water treatment agents.