This invention relates to a pneumatic tire with puncture sealing property and a method for preparing such tire. Such tire is prepared by building an uncured butyl rubber-based layer, which contains a peroxide and a dispersion therein of a particulate precured rubber selected from pre resin-cured butyl rubber and/or pre sulfur-cured diene-based elastomer, into an uncured tire and between an innerliner layer and the tire carcass. Upon curing the prepared tire under conditions of elevated temperature, a major portion of the uncured butyl rubber composition is depolymerized to form a tacky material, which contains said dispersion therein of said particulate precured rubber, which has puncture sealant properties. Such layer of depolymerized butyl rubber and dispersed precured rubber particles may be collectively referred to as the sealant layer.