The invention discloses a groove-insulated gate type gate-drain composite source field plate power device and a fabrication method thereof. The device comprises, from bottom to top, a substrate (1), a transition layer (2), a barrier layer (3), a source electrode (4), a drain electrode (5), an insulation medium layer (7), an insulated groove gate (8), a passivation layer (9), a gate field plate (10), a drain field plate (12) and a protection layer (13); the drain field plate (12) is electrically connected with the drain electrode (5), and the gate field plate (10) is electrically connected with the insulated groove gate (8), wherein, a groove (6) is opened on the barrier layer; and n floating field plates (11) are deposited on the passivation layer arranged between the gate field plate and the drain field plate. All the floating field plates have the same size and are mutually independent, and the floating field plates are equidistantly distributed between the gate field plate and the drain field plate. The n floating field plates, the gate field plate and the drain field plate are completed on the passivation layer by one-time process. The power device has the advantages of simple process, strong reliability and high output power, and the power device and the fabrication method can be used for fabricating high power devices.