The invention discloses a method of utilizing a waste and old cathode material to prepare a demercuration catalyst and an application of the demercuration catalyst. The method comprises following steps: (1) removing aluminum from a waste and old cathode material to obtain an aluminum-free cathode material; (2) subjecting the aluminum-free cathode material obtained in the step (1) to a heat treatment under the protection of inert gas to obtain a metal oxide-carbon composite catalyst; and (3) grinding the metal oxide-carbon composite catalyst obtained in the step (2), heating the composite catalyst in a reducing gas to activate the composite catalyst, and cooling the composite catalyst to obtain the demercuration catalyst. The invention also provides an application of the demercuration catalyst. A waste and old ternary cathode material is taken as the raw material to prepare the demercuration catalyst; the wastes are converted into valuable resources; the cyclic utilization of resourcesis realized; the cost of the demercuration catalyst raw materials is low, and the economic value is high. The provided demercuration catalyst has high demercuration efficiency; the catalytic oxidationefficiency can reach 90% or more, and the economic benefits can be increased prominently.