The invention discloses a leakage monitoring and protection device for a generator casing, and a using method thereof, comprising a leakage detecting device, an insulation resistance measuring mechanism, an insulation resistance comparing mechanism, a control mechanism, an alarm device, and a moisture removing mechanism, wherein the leakage detecting device is connected with the generator casing,the insulation resistance measuring mechanism is connected with the insulation resistance comparing mechanism, the insulation resistance measuring mechanism measures the insulation resistance values between each of the generator windings and the generator casing, and the control mechanism is respectively connected with the leakage detecting device, the insulation resistance detecting mechanism, the insulation resistance comparing mechanism, the alarm mechanism, and the moisture removing mechanism. The invention is capable of detecting the leakage condition of the generator casing in real time,automatically activating the dehumidification mechanism to dehumidify when the leakage occurs, and using the short-circuit current generated in the excitation magnetic field and the stator winding ofthe generator to generate heat and dry, thereby improving the insulation resistance values between each of the windings of the generator and the generator casings, and well ensuring the insulation safety of the generator casing.