The invention discloses an on-line preparation method of a side wall insulated micro tool electrode based on micro-arc oxidation, belongs to the field of micro special machining, and aims to solve the problem of poor precision of the micro machining caused by the need of the conventional side wall insulated electrode off-line preparation method for secondary clamping. The method is realized based on an on-line preparation device of the micro-arc oxidized side wall insulated micro tool electrode. Firstly, a blank of the tool electrode is fixedly arranged at the lower end of a Z shaft of a bed; a reverse copying block is connected with a power signal output end of a high-frequency pulse power supply; the Z shaft of a machine tool rotates at a high speed to perform electrical discharge on-line grinding on a block electrode with the tool electrode blank; then the side wall of the tool electrode is subjected to micro-arc oxidation on-line insulation preparation; an insulating ceramic film is oxidized on the outer surface of the tool electrode blank; on-line preparation of the micro-arc oxidized side wall insulated micro tool electrode is realized. The method is applicable to on-line preparation of the tool electrode.