The present invention discloses a sulfur tolerant carbon monoxide shift conversion catalyst, prepared by the following materials: magnesium source, aluminum source, oxide flux, crystal growth agent, rare earth additive, CoO, MoO3 and an acidic aqueous solution. A preparation method of the catalyst is provided, comprising the steps of: S1, Adding an aqueous acidic solution and a specific amount of rare earth additive to a specific amount of magnesium source, aluminum source, oxide flux and crystal growth agent, followed by kneading to produce a mixture; S2, Extruding the mixture to obtain an extruded strip product; S3, Drying the extruded strip product to give a semi-finished product; S4, Calcining the semi-finished product to obtain a catalyst carrier; S5, Impregnating the catalyst carrier with the active components CoO and MoO3 by an incipient-wetness impregnation method to obtain an impregnated product; and S6, Calcining the impregnated product to obtain the catalyst. The oxide flux and crystal growth agent can participate in a solid phase reaction between the magnesium source and aluminum source to form spinel structure, thereby improving the mechanical strength and stability of the spinel. The nano-sized active component can effectively improve the dispersion of the active component, and improve the catalytic activity of the granular boundary of the active component.