The invention discloses a power grid component cascading failure simulation method. According to the invention, voltage and line active power flow, which have great influences for the failure rate of a component, are selected to act as variables to correct the failure rate of the component so as to enable the simulation to be closer to the reality; traditional methods such as proportional load shedding, nearby load shedding and load shedding performed according to the importance degree of loads are abandoned when load shedding is performed, an optimal load shedding method is adopted, and all factors, which can be used for adjustment, in the system are comprehensively utilized, so that a problem of load shedding is well solved theoretically so as to acquire an operation scheme capable of enabling the overall benefit of the system to be the highest; and the power grid component cascading failure simulation method not only considers an alternating-current mode, but also considers a direct-current mode in power flow calculation, so that both the calculation accuracy and the calculation speed are well considered.