The invention discloses a coaxial double-head diamond boring lathe and a fine boring method thereof. The coaxial double-head diamond boring lathe comprises a supporting frame, a step motor, a lead screw, a connecting frame, an upper alternating current motor, an upper transmission belt, an upper encoder, an upper main shaft, a clamp, a workbench, a hydraulic device, a lower main shaft, a lower encoder, a lower transmission belt, a lower alternating current motor, guide rails and a lathe body. The coaxial double-head diamond boring lathe can perform semi-fine boring and fine boring successively after one clamping, so that under the condition of coaxial machining, semi-fine boring and fine boring machining allowances are ensured and the balance of the fine boring allowance is ensured; by adopting a four-rail enclosed moving structure, the stability of a workpiece in the machining process and high precision are ensured; and after the workpiece is machined, through control of the hydraulic device, manual knife stripping is not required, but just the knife is taken by two hands, and through positioning of the encoders, the knife automatically drops from a cylinder sleeve. The coaxial double-head diamond boring lathe is simple to use, can reduce the labor intensity of working staff and improves the production efficiency.