The invention relates to a composite yarn formation method of built-in powder materials, and belongs to the technical field of textiles. The method comprises the steps that firstly, non-woven flexiblefabric materials are divided into fiber strips S1 and fiber strips S2; secondly, a padding method is adopted for conducting padding combination on the fiber strips S2 and powder to form powder stripsS2'; finally, each composite strip formed by sandwiching one powder strip S2' with two overlapping fiber strips S1 is subjected to composite twisting and yarn formation by adopting a flyer spindle twisting and winding mode, and the linear sheet-shaped composite strips are converted into linear cylindrical yarn. The sheet-shaped untwisted loose-state structures of the composite strips are changed,the technical bottleneck that it is difficult to comb and collect powder into strips by means of traditional methods is broken through, the built-in short-flow yarn formation of powder materials is achieved, the technical purpose of the composite yarn formation of the powder materials is achieved, and the quick and effective method is provided for preparing high-functionality high-quality yarn and apparel fabrics by using the powder materials. The method is short in process flow and easy to popularize and apply.