The invention provides a substation equipment defect early warning method and system based on dynamic closed-loop knowledge management. The method comprises the steps of calculating a defect rate anda defect rate-of defect sample data in an area; sorting the correlation coefficients between the characteristic factors according to the sizes of the correlation coefficients to obtain a correlation coefficient sequence of the correlation strength between the defect rate and the characteristic factors; forming a region-level analysis layer knowledge base by the correlation coefficient sequence inthe region and the defect rate of the defect sample data, and uploading the region-level analysis layer knowledge base to a cloud intelligent analysis layer; enabling the cloud intelligent analysis layer to summarize the data, and calculate the correlation coefficients among the equipment defect rates and defect rate- characteristic factor under different characteristic factor combinations under the condition of considering the weight of each region level; arraning sequentially from large to small to form a cloud intelligent analysis layer operation and maintenance knowledge base; and formingan on-site operation and maintenance inspection early-warning troubleshooting list according to the characteristic factor sequence corresponding to the correlation coefficients among the defect rate-characteristic factors.