The invention discloses a composite fault diagnosis method for a hydraulic AGC system. The method specifically comprises the following steps: S1, mill component dynamic modeling: acquiring the equivalent of each link of a hydraulic AGC system to get a mathematical model thereof; S2, system modeling: simulating a fault, selecting a measuring point, building a multi-signal model of the system, and getting a fault dependence matrix under the multi-signal model; and if the fault is a single fault, getting a fault dependence matrix directly, performing fault diagnosis, and getting a result directly; S3, if the fault is a composite fault, using a blind source separation algorithm to blindly separate measuring point information, getting a fault dependence matrix, and diagnosing the composite fault; and S4, fault diagnosis: after the system fails, getting the information of the measuring point, and locating the fault source by comparing the measuring point information with the fault dependence matrix. Through the diagnosis method of the invention, the purpose of composite fault isolation and location is achieved, and the fault separation rate is improved.