The present invention relates to a catalyst for a side chain alkylation reaction of toluene and methanol and application thereof, and mainly solves the problems of low utilization rate of methanol, low conversion rate of toluene and poor stability of a current catalyst used for the side chain alkylation reaction of toluene and methanol to produce ethylbenzene and styrene. The catalyst uses a modified X or Y molecular sieve as an active component, and at least one of Al, P and B, at least one of rare earth elements, at least one of alkali metal elements and at least one of platinum elements as modified components. A preparation method of the catalyst include the steps of ion exchange or impregnation, and molecular sieve surface modification by using an oxide of silicon. A technical scheme for application of the catalyst includes: the steps that raw materials of toluene and methanol contact with the catalyst to be subjected to a reaction to produce ethylbenzene and styrene, and well solves the problems, and the catalyst can be used in the industrial production of preparation of ethylbenzene and styrene by the side chain alkylation reaction of toluene and methanol.