Disclosed are a zirconium alloy for a nuclear fuel cladding having a good corrosion resistance by reducing an amount of alloying elements and a method of preparing a zirconium alloy nuclear fuel cladding using thereof. The zirconium alloy includes 0.2 to 0.5 wt % of niobium (Nb); 0.2 to 0.6 wt % of iron (Fe); 0.3 to 0.5 wt % of chromium (Cr); 0.1 to 0.15 wt % of oxygen (O); 0.008 to 0.012 wt % of silicon (Si) and a remaining amount of zirconium (Zr). The total amount of the niobium, the iron and the chromium is 1.1 to 1.2 wt %. A good oxidation resistance of the nuclear fuel cladding may be confirmed under accident conditions as well as normal operating conditions of a reactor, thereby improving economic feasibility and safety.