The invention relates to a metal-doped yttrium oxide stabilized zirconia material as well as a preparation method and the application thereof. The metal-doped yttrium oxide stabilized zirconia material comprises the following components: (8YSZ)1-x(FeO1.5)x, in the formula, x is 0.08-0.14. The iron-doped yttrium oxide stabilized zirconia material provided by the invention has oxygen ion conductivity and electron conductivity simultaneously, and in addition is low in price and excellent in mechanical property and stability. The preparation method of the iron-doped yttrium oxide stabilized zirconia material provided by the invention is simple in process, and the prepared iron-doped yttrium oxide stabilized zirconia material provided by the invention is very small in pore number, and is greatly improved in both density and mechanical performance. The iron-doped yttrium oxide stabilized zirconia material provided by the invention can be used as a dense diffusion baffle layer in an oxygen sensor, a cathode of a solid oxide fuel battery or an oxygen separation membrane.