The invention discloses a high-efficiency time domain electromagnetic simulation method based on an H matrix algorithm, which can realize electromagnetic simulation on a large three-dimensional target. In the method, a time domain finite element method (TDFEM) is used as a background, a low-rank compression technique is used as a core, and a tree structure is used as a basis for carrying out logical unit (LU) decomposition on a sparse matrix generated by the TDFEM by a four arithmetic algorithm corresponding to the H matrix. The acquired upper and lower triangular factors have low-rank compressible characteristics, and the compressed matrix equation can realize quick solution of high-efficiency time domain electromagnetic simulation by the H matrix algorithm. The high-efficiency time domain electromagnetic simulation method has the advantages of fast computation speed, low memory consumption, controllable computation accuracy, good stability and the like, can reduce the complexity of computation to O(Nlog<2>N) and reduce the memory consumption to O(NlogN), can be widely applied to the solution of a large sparse linear system of equations during high-efficiency time domain electromagnetic simulation, and can provide important reference for analyzing the electromagnetic property of the large three-dimensional target.