A DC generator with high energy efficiency and a power generation method thereof are disclosed, a magnetic circuit structure for generate electricity is composed of a novel high-permeability material-iron-base nano-alloy material and a rare earth aluminum-iron-boron magnet, the biggest advantage is that a small excitation power can obtain a comparable power output, at that same power, the volume of the generator is much smaller than that of the conventional generator. When the rotor body is pus by the external force of the power device to rotate the N magnetic pole and the S magnetic pole alternately to excite the nano-microcrystalline iron core of the power generation coil, the nano-microcrystalline iron core is alternately changed by the magnetic field, and an induced current is generatefrom the coil. The invention can realize high-energy and high-efficiency power generation effect, and requires small external excitation power, the whole generator is small in volume, light in weight, energy-saving, large in power, strong in overload capacity, and the like, and has a wider use range.