The invention discloses a label printer and a label accurate positioning printing method thereof. The label printer comprises an outer shell, a label box installed in the outer shell, a power mechanism and a control mechanism which are used for controlling paper outlet of the label box and take-up and pay-off of thermal transfer ribbons, and a printing head used for achieving label printing. According to the invention, internal spaces of the label box are reasonably planned, and a linear label paper outlet channel and a label rollback release space are arranged, so that smooth paper feeding and discharging are guaranteed, and label paper is prevented from wrinkling in a rollback process; through improvement of a gear transmission system, forward and reverse rotation of a gear can be realized through the same motor, so that normal printing of the label paper and the thermal transfer ribbons can be realized, rollback of the label paper and the thermal transfer ribbons can also be realized, waste of the label paper and the thermal transfer ribbons is avoided, and the material utilization rate is improved; and through arrangement of a photoelectric sensor with a reflecting prism, an occupied space of the label box is reduced, and favorable conditions are provided for realizing a miniaturized label box. The invention is compact in structure, high in space utilization rate, accurate and reliable in printing and wide in application range.