The invention relates to a dielectric loss testing circuit capable of preventing inverse transmission of induced electricity and a control method thereof. The dielectric loss testing circuit comprisesa control panel single-chip microcomputer, a single-chip microcomputer measurement circuit, external equipment, a 220V power supply, a variable-frequency power supply, a Cx positive wiring current detection circuit, a Cn current detection circuit, a Cx negative wiring current detection circuit, a standard capacitor Cn and a switch K4, and further comprises a single-pole double-throw switch K3, awire inverting switch K5, a first indicator light circuit and a second indicator light circuit, wherein a moving contact of the single-pole double-throw switch K3 is connected with the standard capacitor Cn and a static contact of the wire inverting switch, one static contact of the single-pole double-throw switch K3 is connected with a step-up transformer, another static contact of the single-pole double-throw switch K3 is connected with the first indicator light circuit, and a moving contact of the wire inverting switch is connected with the second indicator light circuit. The dielectric loss testing circuit realizes the research for a multi-channel association test, enhances the functionality of a test instrument and meets the application of multiple test occasions on site, such as a test without wire disconnection, a multi-casing test and other diagnostic test items.