The invention relates to an inductive switch knob and an encoding method thereof. The inductive switch knob comprises an inductive switch circuit board and an inductive knob, wherein the inductive switch circuit board and the inductive knob are placed on both sides of an operation panel respectively; the inductive switch circuit board and the inductive knob are positioned through two permanent magnets which attract each other; the inductive switch circuit board is further provided with a plurality of Hall switches which are distributed on the same circular arc; and the inductive knob further comprises a knob base and a plurality of permanent magnets which are uniformly distributed on the same circumference of an inner shell of the knob base. The inductive switch knob is characterized in that 2X Hall switches are provided; 4Y permanent magnets are provided; X and Y are natural numbers; two adjacent permanent magnets of which inductive magnetic poles are N and two adjacent permanent magnets of which magnetic poles are S are arranged alternatively; circles where the Hall switches and the permanent magnets are positioned are spatial concentric circles; and layout angles of each group of Hall switches on the circular arc are consistent with layout angles of two adjacent permanent magnets on the circular arc. The inductive switch knob is novel in structure, and has high universality.