The invention discloses a method for preparing a multifunctional composite material by an in situ reaction of waste clay mineral adsorbing dye. The method comprises carrying out dehydration treatment on clay mineral adsorbing dye waste water, dispersing the treated clay mineral in water according to a solid-liquid ratio of 1: 10, adding 1-20% by mass of a metal salt into the solution, carrying out stirring dissolution, transferring the solution into a hydro-thermal reaction pot, carrying out a reaction process at a temperature of 80-200 DEG C for 1-72h, carrying out natural cooling to a room temperature, and carrying out centrifugation, washing, drying, grinding and sieving to obtain a brownish black composite material. A waste soil dye as a reducer undergoes a one-step hydrothermal reaction on the premise of no any chemical reducing agent so that metal ions undergo an in-situ reduction reaction to produce metal nanoparticles, and the dye molecules are charred to form a clay mineral/charcoal/metal nanoparticle composite material so that clay mineral-dye waste water treatment-functional material application is realized and a novel approach of composite material cycle is created. The method is used for treatment on various types of waste water.