The invention discloses an internet online identification and reading file anti-theft and downloading system and a method thereof. The internet online identification and reading file anti-theft and downloading system mainly comprises a file uploading module, a format conversion module, a data separation module, an editing and distributing module, an encryption and authorization module, a reader module and a file downloading module, wherein the file uploading module is used for uploading file resources with various formats; the format conversion module is used for uniformly converting the file resources with the various formats uploaded by a file owner to display files with Flash formats; the data separation module is used for carrying out file cutting on the display files, extracting and saving a part of data into a database and realizing the data separation of the display files; the editing and distributing module is used for editing and distributing the uploaded files; the encryption and authorization module is used for carrying out encryption and authorization operation on downloaded files; the reader module is used for realizing the self protection of a reader and the online display and presentation of the file resources; and the file downloading module is used for being called by the reader module, downloading the files and the like. By adopting the internet online identification and reading file anti-theft and downloading system, the illegitimate replication and the illegitimate diffusion of protected files can be effectively controlled.