The invention relates to a ferromagnetic oxide powder for magnetic recording and a preparation method thereof. The invention firstly provides the ferromagnetic oxide powder for magnetic recording, which comprises the raw materials: ferric oxide and compound of strontium or barium; and based on the total weight of the ferric oxide and the compound of strontium or barium, the ferromagnetic oxide powder also comprises the components by weight percent: 0.01-2.0wt% of bismuth trioxide, 0-0.2wt% of nano silicon dioxide and 0-0.2wt% of nano aluminium oxide or chromium sesquioxide, and the mole ratiobetween ferric element and strontium or barium element is 10-12. The invention also provides the preparation method of the ferromagnetic oxide powder, comprising the steps of dosing, mixing, preburning, crude crushing, fine grinding, drying, annealing and smashing. The ferromagnetic oxide powder has little grain fineness, high coercive force and good dispersity, can reach narrower grain fineness distribution, meets the requirement of being taken as a magnetic recording medium, and is suitable for making magnetic recording mediums such as a magnetic card, a magnetic ticket, etc.