The invention relates to a system and method for misfire diagnosis of vehicle engine. A system for the misfire diagnosis includes an angular velocity sensor acquiring an angular velocity of an engine and an acceleration sensor acquiring an acceleration according to vertical vibration of a vehicle. A diagnosis unit is configured to compare the acceleration with an acceleration threshold to determine whether the vehicle is driven on a rough road and to diagnose whether misfire occurs. A threshold setting unit is configured to acquire misfire diagnosis results in a first test environment in which the vehicle is driven on the rough road without forcible misfire and in a second test environment in which the vehicle is driven on the rough road while the forcible misfire occurs. The threshold setting unit is further configured to calculate a misfire misdiagnosis rate and to update the acceleration threshold.