The invention discloses a dimethyl ether production method with a cascade reaction. After being preheated, a methanol preheater is fed into a methanol evaporation tower; after evaporating, methanol enters a heat exchanger; under certain pressure and the catalysis of a modified catalyst, a first-order methanol dehydration reaction is performed to produce crude dimethyl ether; a mixture of the crude dimethyl ether produced after the reaction and unreacted methanol is cooled through the heat exchanger, and is fed into a second-order reactor; under certain pressure and the catalysis of a molecular sieve based catalyst, a low-temperature methanol dehydration reaction is performed to produce a dimethyl ether mixture; the mixture produced after the reaction is fed into the methanol preheater; after being fed into an evaporator reboiler to recover the heat, the other part of the mixture enters the methanol preheater; a mixture discharged from the methanol preheater directly enters a dimethyl ether rectifying tower to produce dimethyl ether by rectification, and the dimethyl ether is cooled to obtain the qualified finished product dimethyl ether; the qualified finished product dimethyl ether is fed into a product storage tank for storage; residual liquor after the rectification is returned to a stripping tower, and a small amount of remaining methanol is recovered for recycling. The dimethyl ether production method disclosed by the invention is high in conversion rate, energy-saving, environmentally friendly, low in production cost and high in product quality, is a great progress and innovation in dimethyl ether production, and has great economic and social benefits.