The invention discloses a water level monitoring system based on image processing and a method, which mainly solve the problem that water level cannot be monitored automatically in the prior art. The water level monitoring system comprises a water level gauge, a water level image processing module, a wireless communication module and a central management server module. Working principle of the system is that: firstly the water level gauge is used for marking the water level, water level images marked by the water level gauge can be collected by a camera, the water level image processing module further performs automatic positioning, skew correcting and recognizing on the water level gauge in the water level images to obtain water level data and transmits the water level data to the wireless communication module through a wireless communication network, then the wireless communication module transmits the received water level data to the central management server module which stores the received water level data into a computer data base so as to draw current hydrograph in real time, when the current water level is higher than a preset water level, alarm information can be given out, and accordingly automatic monitoring of the water level can be achieved.