Disclosed are a flexible substrate, a preparation method thereof, and a display device, to improve the encapsulation effect and the product yield. The flexible substrate includes: a base substrate, where the base substrate has a plurality of sub-pixel areas arranged in an array, connection areas each for connecting adjacent sub-pixel areas; and hollow areas among the sub-pixel areas and the connection area; in each sub-pixel area, there are a pixel circuit, an isolation structure surrounding the pixel circuit, and a light-emitting functional layer covering the pixel circuit and the isolation structure; the isolation structure has a hollow pattern at a junction of the sub-pixel area and the connection area; the connection area has a signal line therein, and the signal line is electrically connected with the pixel circuit through the hollow pattern; and the isolation structure has an undercut that interrupts the light-emitting functional layer.