The invention relates to a power transformer monitoring system and method. The system is characterized by comprising a grounding current monitoring module, an oil-dissolved gas monitoring module, a partial discharge monitoring module and a temperature monitoring module. The output ends of the grounding current monitoring module, the oil-dissolved gas monitoring module, the partial discharge monitoring module and the temperature monitoring module are respectively connected with the input end of a signal acquisition module. The output end of the signal acquisition module is successively connected with a conversion module and a CPU processing module. The CPU processing module is also connected with a display module and an alarm module respectively. Based on the monitoring system and method, the fault state of a current power supply transformer can be automatically acquired and reported on the scene. Meanwhile, the system is simple in structure and low in application cost.