The invention discloses a zirconium oxychloride and a preparation method thereof. The method comprises the following steps: 1) heating crude zirconium tetrachloride prepared by a chlorination technology in a hydrogen atmosphere, and reacting ferric chloride in the crude zirconium tetrachloride with hydrogen to form ferrous chloride; 2) performing heating to a first preset temperature to vaporize impurities having a lower boiling point than zirconium tetrachloride in the crude zirconium tetrachloride; and 3) performing heating to a second preset temperature to sublimate the zirconium tetrachloride in the crude zirconium tetrachloride, and hydrolyzing the sublimated zirconium tetrachloride to generate the zirconium oxychloride. The preparation method of the zirconium oxychloride can effectively remove the impurities, reduce the ferric chloride in the crude zirconium tetrachloride into the ferrous chloride, and can prevent the ferric chloride impurity from being mixed during the sublimation of the zirconium tetrachloride, so the high-purity zirconium oxychloride product is produced, and the purity of the zirconium oxychloride is not less than 95 mass%.