The invention relates to silver alloy and a preparation method thereof. The silver alloy is composed of, by weight, 93.5-99.6% of silver, 0.1-2% of magnesium, 0.1-2% of aluminum, 0.1-2% of manganese and 0.1-5% of yttrium. The elongation at break of the silver alloy is larger than 47%, the Vickers hardness after cold work is subjected to plastic deformation is larger than or equal to 53%, and the silver alloy is invariant in color within at least 72 hours when placed in an Na2S water solution of 0.1 M under room temperature. The silver alloy has high ductility and cold hardening, the metallic luster of the silver alloy can be kept for a long term under a sulfuration atmosphere condition after being subjected to thermal refining, and the silver alloy has good anti-sulfuration performance andbroad application prospects.