The invention discloses an underground construction deformation joint waterproof structure and a construction method thereof. The waterproof structure comprises a deformation joint, and an expansion cavity formed in the position 30 to 70 mm away from the top of the deformation joint, and the interior of the expansion cavity and deformation joint space above the expansion cavity are filled with a seal material with the waterproof effect; the construction method comprises the steps that firstly, a frame of a precast concrete wall is built, an expansion cavity mold in the corresponding shape is made, and the position of the preset expansion cavity is marked in the position, 30 to 70 mm away from the top o the deformation joint, in the reserved deformation joint; secondly, the expansion cavitymold is placed on the marked deformation joint and is used for supporting so as to form the expansion cavity; thirdly, concrete is poured into the frame for prefabrication molding, and after curing solidification, the expansion cavity mold and the frame are removed; fourthly, the position, below the expansion cavity, in a deformation joint hole is filled with a flexible filler, and a seal material with the waterproof effect is poured into the expansion cavity and the deformation joint space above the expansion cavity. The structure is simple, the function is reliable, the construction methodis simple, operation is easy, and the cost is low.