The invention discloses a screw type transverse cutting machine tool setting testing system and method to be used for solving the tool setting problem of a corrugated paper screw type transverse cutting machine. The screw type transverse cutting machine tool setting testing system comprises a tool rest, a blade, a magnetic base, a support, an industrial camera with scale paper and a lens; the blade is installed on a transverse plate of the tool rest, then the support is arranged on the blade, and the support is absorbed to a vertical plate of the tool rest through the magnetic base; the lens aligns to a tool nose of the blade to adjust the industrial camera with the scale paper to be focused; an adjusting bolt is adjusted to set the tool nose of the blade to the appointed scribed line in the industrial camera with the scale paper and then tool setting of the blade is achieved. The existing screw type transverse cutting machine is tedious in tool setting operation and low in tool setting efficiency and has no tool setting method and standard and master workers performs tool setting through working experience. The screw type transverse cutting machine tool setting testing system can achieve easy tool setting, is simple in structure, convenient to operate and high in tool setting efficiency and can be applied and popularized in a large range.