Abstract: A ceramic tool with integrated temperature sensing and cutting functions and preparation method and application thereof. The ceramic tool comprises a ceramic matrix, a positive thermoelectric layer and a negative thermoelectric layer being provided on two surfaces of the ceramic matrix; the ceramic matrix being formed by sintering a first matrix material, a first binding agent and a first reinforcing phase, and the thermoelectric layer being formed by sintering of a thermoelectric material; the first matrix material comprises one or more of Al2O3, Si3N4 and CBN; the first binding agent comprises one or more of Mo, Ni, Co, W and Cr; the first reinforcing phase comprises one or more of TiC, WC, SiC, MgO, Cr2O3, TiO2 and ZrO2; the thermoelectric material for the positive thermoelectric layer comprises ZrB2 and SiC; the thermoelectric material for the negative thermoelectric layer comprises ZrB2, SiC, and graphite.