The invention relates to a functional fiber and a preparation method thereof. The preparation method includes that after a sheath-core composite fiber with a slot and functional particles is subjectedto soaking treatment in a solvent, a polymer film is formed on the surface of the fiber through polymerization to obtain the functional fiber, wherein the sheath-core composite fiber with the slot and the functional particles are obtained by that a sheath layer raw material and a core layer raw material are melted and subjected to spinning through a sheath-core spinneret with spokes in spinneretorifices, and the finally prepared functional fiber is mainly composed of a hollow fiber, the functional particles in the hollow fiber and the polymer film coating the surface of the hollow fiber. According to the preparation method of the functional fiber, by fiber surface polymerization to form the polymer film, stable existence of the functional particles in the fiber is guaranteed; by drawingof the fiber after polymerization, the hollow structure of the fiber can be thinned while mechanical performances of the fiber are improved, the functional particles in the fiber core layer can be arrayed densely and orderly, and conduction of a functional network is facilitated.