The invention provides a color film substrate and a manufacturing method thereof. The color film substrate comprises a substrate, a black matrix, a color resist layer, at least one color resist retaining wall arranged on the black matrix, and an organic flat layer arranged on the black matrix and the color resist layer, wherein the black matrix and the color resist layer are arranged on the substrate; the color resist retaining wall is formed on the black matrix in a border area of the substrate; the thickness of the organic flat layer is smaller than that of the color resist retaining wall, so that the organic flat layer is naturally broken on the color resist retaining wall after being manufactured; the organic flat layer in the border area is separated from the organic flat layer in an effective display area by using the color resist retaining wall; water vapor can be effectively prevented from invading the effective display area through the organic flat layer; components in the effective display area are prevented from being corroded by the water vapor; and the working stability of a liquid crystal display device, especially a narrow-border liquid crystal display device is improved.