The invention relates to a low excitation impedance transformer single-phase grounding protection device and a protection method. Through bypass grounding current shunting, grounding arcs are eliminated, the grounding protection effect is improved, grounding and line selection can be realized, and line selection and fault positioning are accurate. The device comprises three single-phase breakers, a low excitation impedance transformer, a signal generator, a zero sequence current transformer and a control detection device, wherein wire incoming sides of the three single-phase breakers are respectively connected with a corresponding bus through an isolation switch or a separation breaker, wire outgoing sides are connected with an original edge winding of the low excitation impedance transformer, the low excitation impedance transformer is a single-phase three winding dry core transformer having the original edge winding, a secondary edge main winding and a secondary edge secondary winding, one end of the original edge winding is connected with a ground network or a ground row through the zero sequence current transformer, the secondary edge main winding is connected with the signal generator, the secondary edge secondary winding is connected with the control detection device, the secondary edge main winding is for signal injection, and the secondary edge secondary winding is for signal measurement.