The invention provides a bobbin insertion device of an automatic bobbin winder and a bobbin insertion method. The bobbin insertion device of the automatic bobbin winder comprises a bobbin yarn conveying device, a bobbin yarn large and small end judgment device, a bobbin yarn release device, trays, a guiding and positioning device and a control system, wherein the guiding and positioning device is arranged above the trays. The bobbin insertion device of the automatic bobbin winder is characterized in that the bobbin yarn release device comprises a first supporting body, a second supporting body, a third supporting body and a stretching and drawing driving mechanism of the supporting bodies, wherein the first supporting body, the second supporting body, the third supporting body and the stretching and drawing driving mechanism are arranged above the guiding and positioning device. The control system controls the stretching and drawing driving mechanism to drive the first supporting body, the second supporting body and the third supporting body to conduct stretching and drawing movement according to the judgment result of the bobbin yarn large and small end judgment device, bobbin yarn which is conveyed by the bobbin yarn conveying device to the first supporting body is released, the small end of the bobbin yarn is blocked by the second or third supporting body, the bobbin yarn can fall into the guiding and positioning device in a mode that the large end of the bobbin yarn is downward, and then the bobbin yarn can be inserted into the trays. According to the bobbin insertion device of the automatic bobbin winder, the bobbin yarn release device is simple and compact, the movement inertia of release of the bobbin yarn is small, the movement process of release of the bobbin yarn is short, the bobbin insertion speed can be substantially increased, and the phenomenon that bobbins are stuck can be avoided.