A new method of preparing memantine hydrochloride, comprising the following steps: reacting 1-bromo-3,5-dimethyl adamantane and urea/formic acid, with formic acid also acting as the solvent; hydrolyzing with aqueous inorganic acid; alkalifying, extracting and acidifying with hydrochloric acid; finally collecting target compound. The method uses inexpensive raw materials and is performed in homogeneous phase under mild conditions. It can achieve high yield and good product purity, and is suitable for macrochemistry. The purity of crude product is 99.0%, and reaches 99.98% after first recrystallization, yield: 69.5%, mp: 332 C (DSC).