The invention discloses a microalloyed magnesium alloy sheet with high formability and a preparation method thereof, and belongs to the nonferrous metal material and machining field, which solves theproblem of poor room temperature plasticity existing in magnesium alloy sheets. The microalloyed magnesium alloy sheet with high formability comprises, by mass percent, 0.5-1.0% of zinc, 0.3-0.6% of ytterbium, 0.2-0.4% of zirconium, and the balance magnesium and inevitable impurity elements. A weak base surface texture is showed through the sheet formed by synchronous cross rolling, the elongations in the rolling direction, 45-degree rolling direction and transverse direction are about 30%, the erishen value is 8.11 mm, and the room temperature formability is good. The key preparative techniques comprise smelting, casting, rolling and annealing, and has the advantages of being efficient, rapid, low in cost, high in operability, good in process stability, capable of realizing batch production easily, energy-saving and environment-friendly.