The invention discloses a liquid hydrogen source material dehydrogenation reaction system and an application method thereof. The dehydrogenation system comprises a storage device used for storing a liquid hydrogen source material and a liquid hydrogen-storage carrier, a reaction kettle used for dehydrogenating the liquid hydrogen source material, a buffering tank used for storing hydrogen gas, and a heating device arranged outside the reaction kettle and used for heating the reaction kettle. According to the invention, the liquid hydrogen source material is delivered into the reaction kettle through a pump; the liquid hydrogen source material is dehydrogenated in the reaction kettle; produced hydrogen gas is delivered to the buffering tank; and residual liquid hydrogen-storage carrier is delivered back to the hydrogen storage tank. The normal-temperature normal-pressure liquid hydrogen source material dehydrogenation system provided by the invention is used for carrying out a dehydrogenation reaction upon the liquid hydrogen source material. The produced hydrogen gas is supplied for a fuel cell or an internal combustion engine. The hydrogen gas is converted into electrical energy or mechanical energy which can be applied in various industrial and civil fields such as automobiles, electrical power, energy storage, chemical engineering, pharmacy, and mobile devices.