The invention provides a TFT array substrate and a manufacturing method thereof. The TFT array substrate comprises a base, a semiconductor layer formed on the base, a pixel electrode formed on the base, a grid insulation layer formed on the semiconductor layer, a grid electrode formed on the grid insulation layer, an interlayer insulation layer formed on the base, a source electrode arranged on the interlayer insulation layer and electrically connected to the semiconductor layer, and a drain electrode arranged on the interlayer insulation layer and electrically connected with the semiconductor layer and the pixel electrode, wherein the pixel electrode and the semiconductor layer are located on the same layer; the grid insulating layer, the grid electrode and the pixel electrode are covered with the inlayer insulating layer. According to the TFT array substrate and the manufacturing method thereof, etching of metal etching liquid on metal oxide can be avoided. Besides, compared with a traditional TFT of a top grid structure, the process of two photomasks of the TFT array substrate with a top grid structure is omitted, and therefore production cost is reduced.