There provide an organic light emitting diode substrate and preparation method thereof and a display panel. The preparation method includes: forming a pixel defining layer which defines a pixel region and has a via hole on a base; forming an auxiliary electrode in the via hole; forming a capsule structure encapsulating a conductive liquid on the auxiliary electrode; expanding the capsule structure to be broken so as to enable the conductive liquid to form a connection electrode; and forming a first electrode covering the base, the first electrode being connected to the auxiliary electrode through the connection electrode. In the present disclosure, the connection electrode is formed through the capsule structure encapsulating the conductive liquid, so that the first electrode is connected to the auxiliary electrode through the connection electrode. The preparation process is simpler and the production cost is lower.