The invention discloses a power failure alarm circuit and a control method thereof, and relates to the field of power failure alarm circuits. The power failure alarm circuit comprises a discharge module, an isolation module and a power failure electric voltage detecting module, wherein the input end of the discharge module is used for being connected with an input power supply; the input end the of the isolation module is used for being connected with the input power supply, the output end of the isolation module is connected with the input end of an energy storage unit, and the output end ofthe energy storage unit is used for being connected with a function module of terminal equipment; the input end of the power failure electric voltage detecting module is connected between the discharge module and the isolation module, the output end of the power failure electric voltage detecting module is used for being connected with the function module, a CPU is arranged between the output endof the power failure electric voltage detection module and the function module, the power failure electric voltage detecting module is used for detecting the voltage of the input power supply, after voltage dividing is carried out, the divided voltage is transmitted to the CPU, and the CPU is used for judging whether the divided voltage is less than a preset power failure detection threshold or not. The power failure alarm circuit and the control method thereof is suitable for a PON gateway, a set-top box, a fusion terminal and other terminal equipment, and the voltage of the input power supply is enabled to be rapidly reduced, so that the capacity, cost and size of an energy storage unit are reduced.