The invention discloses a microgrid power supply system and a control method thereof. The system comprises a generator, a rectification circuit, a DC (Direct Current)/DC circuit, a charging circuit, a battery pack working mode control circuit, a battery pack, an inversion circuit, a power distribution bus bar and a controller and further comprises a monitoring protection and metering circuit I, a monitoring protection and metering circuit II, a power factor compensation circuit and a battery pack monitoring protection circuit. The microgrid power supply system can work in a grid-connected state, also can realize off-grid power supply, and can be used for effectively combining a solar generator, a stand-by generator and a battery pack to realize reliable and continuous power supply.