The invention discloses an electro-hydraulic compound control hydraulic system of a loader. The electro-hydraulic compound control hydraulic system comprises a hydraulic tank, an engine, a variable pump, an electric control reversing valve block, a first shuttle valve, a second shuttle valve, a third shuttle valve, a distribution valve, a pilot valve, a pilot oil source block, an electric control handle and a controller. The invention further provides a control method which uses the electro-hydraulic compound control hydraulic system of the loader. According to the electro-hydraulic compound control hydraulic system of the loader and the control method, staged compound control is performed according to actual working conditions of the loader, so as to guarantee good inching performance and manoeuverability when the loader slowly moves; when the loader quickly moves, energy losses can be further reduced, the loader can automatically adapt to actual load, and load impact on the pump is reduced; under high pressure and large load, the output of the hydraulic system is automatically adjusted, so as to reduce load impact on the engine and guarantee stable and reliable operation of the engine.