The invention discloses a current limiting type dynamic voltage restorer and an uninterrupted power supply method thereof; the restorer comprises a current transformer, an A-phase cascade transformer, a B-phase cascade transformer, and a C-phase cascade transformer; the primary side input ends of the A,B and C phase transformers are respectively connected with A phase, B phase and C phase of a power supply, and primary side output ends are respectively connected with a load; A phase, B phase and C phase of an output end of the current transformer are respectively connected in series with secondary sides of the A,B and C phase transformers. The current limiting type dynamic voltage restorer is connected between a power grid and the load in a cascade manner, thus realizing dynamic compensation for the power grid voltage, and limiting power grid short circuit fault current. The uninterrupted power supply method comprises an IGBT bypass work mode, a thyristor follow current work mode and a machinery switch bypass work mode, thus enhancing power grid safety and reliability, realizing load power supply continuity, and ensuring normal operation of the power grid and the load.