The invention relates to the field of mechanical adjustment, in particular to a plasma torch and a gap adjusting method thereof. The plasma torch comprises a plasma torch body, a first insulating sleeve and an adjusting assembly, wherein the plasma torch body comprises a spray head, a tungsten needle, an inner shell and an outer shell, the tungsten needle is connected with a first terminal, the polarity of the spray head is opposite to that of the tungsten needle, the tungsten needle is arranged in the inner shell, the inner shell is arranged in the outer shell, an air cavity is formed between the tungsten needle and the inner shell, and a cooling cavity is formed between the inner shell and the outer shell; the first insulating sleeve is connected with the shell, and the end, away from the nozzle, of the tungsten needle is arranged in the first insulating sleeve; and the adjusting assembly is arranged on the first insulating sleeve and is used for driving the tungsten needle to translate along the axial direction of the plasma torch body so as to change the distance between the tungsten needle and the nozzle. According to the plasma torch provided by the invention, the gap between the tungsten needle and the spray head can be quickly and accurately adjusted, so that the jet flow velocity and jet flow appearance of the plasma beam are changed, and the use requirements of multiple scenes are met.