The invention relates to a distributed power supply grid connected alarm system and an operating method thereof. The distributed power supply grid connected alarm system comprises a photovoltaic assembly, an inverter, a voltage-drop release breaker, a disconnector, a grid connected electric energy meter, an alarm device and an earth leakage protection breaker. The inverter, the voltage-drop release breaker, the grid connected electric energy meter, the alarm device and the earth leakage protection breaker are connected in sequence. The voltage-drop release breaker is connected to the grid connected electric energy meter through the disconnector. The alarm device comprises a master control MCU, and also an information acquisition module, a voltage abnormity alarm module, a frequency change alarm module, a display module, an uplink communication module, a storage module and a power supply module that are connected to the master control MCU. When the distributed power supply grid connected alarm system is running, the earth leakage protection breaker is connected to a power grid side, and the alarm device can send alarm information, if voltage drops or frequency changes of the power grid side exceed a certain range, to notify management workers of checking the running condition of distributed power supply grid connected system equipment. Therefore, the safety of a power grid, equipment and operation management workers is improved in a wider scope and to a greater extent.