Compound insulating mortar of buildings consists of the following parts of materials by weight: a cementing agent which consists of 140.0-160.0 parts of 42.5# Portland cement, 2.0-6.0 parts of emulsion powder and 0.5 part of methyl cellulose; an aggregate which consists of 70-90 parts of hydrophobic perlite, 15-30 parts of vitrified micro bubbles and 12-25 parts of polystyrene foam powder; fiber which consists of 0.8-1.2 parts of plant fiber and 0.5 part of polypropylene fiber; and an admixture which consists of 10-20 parts of fly ash, 7.5-17.5 parts of silicon powder and 0.5 part of clay. The materials are weighed and evenly mixed, and added with a proper amount of water and mixed to obtain the mortar. The compound insulating mortar has the advantages of reasonable ingredient gradation, convenient construction, and adhesive strength, insulating property, impact resistance toughness and fireproof grade far beyond the national standard; and the polystyrene foam powder is obtained by recovering and recycling waste materials, which is beneficial for environmental protection, energy saving, high value and low cost.