The invention relates to a composite spinel material for insulation of the side wall of an aluminium electrolysis cell and a preparation method thereof. The technical scheme is that the composite spinel material comprises the procedures of: by adopting 65-75wt% of granule, 10-20wt% of iron-oxide fine powder, 5-15wt% of zinc-oxide fine powder and 5-10wt% of alpha-Al2O3 micropowder as a mixture, adding 0.5-2.0wt% of manganese monoxide and 2.5-5.5wt% of polyvinyl alcohol, stirring, forming, drying, and insulating for 2-8 hours at the temperature of 1350-1550 DEG C to obtain the composite spinel material for insulation of the side wall of the aluminium electrolysis cell. The preparation method comprises the following steps of: byadopting 55-65wt% of iron-oxide fine powder and 35-45wt% of zinc-oxide fine powder as materials, adding 0.5-2.0wt of vanadium pentoxide fine powder and 2.0-5.0wt% of polyvinyl alcohol, mixing, forming, drying, insulating for 2-6 hours at the temperature of 1300-1500 DEG C, cooling and crushing. A product prepared by the invention has the characteristics of low cost, lower heat-conductivity coefficient, good antioxidation property and excellent electrolyte-corrosion resistance.