The invention discloses a dry powder extinguishing agent and a preparation method thereof. The dry powder extinguishing agent comprises the following materials in percentage by weight: 80% of B-Mg sludge, 6% of sodium bicarbonate, 8% of potassium nitrate, 1% of sulfamic acid and 5% of an anti-blushing agent. The preparation method of the dry powder extinguishing agent comprises the following steps: S1, smashing the raw material B-Mg sludge; S2, through metering, adding 80% of B-Mg sludge, 6% of sodium bicarbonate, 8% of potassium nitrate, 1% of sulfamic acid and 5% of an anti-blushing agent ina mixing silicification device for mixing silicification; S3, drying the material subjected to silicification; S4, sieving the dried material; and S5, packaging the sieved material and metering to obtain a finished product. According to the dry powder extinguishing agent and the preparation method thereof, B-Mg sludge generated during the production process of a borax factory is utilized, the resource is reasonably utilized, the molecular particle size of B-Mg sludge is smaller than 15 microns, and a plurality of holes are formed in the surface, so that the surface contact area is increased and the adsorption capacity is high.