The invention discloses a road foundation layered vertical settlement and transversal displacement automatic monitoring device and a monitoring method thereof in the technical field of optical measurement. The invention adopts a technical proposal that the automatic monitoring device comprises a measuring and positioning unit, a laser displacement sensing unit, a laser angle sensing unit, a measuring signal control unit, a measuring data transmission unit, a central processing unit and a power module; and the automatic monitoring method comprises: firstly, assembling various devices; secondly, starting a pulling device, stopping the device when a positioning sensor arrives at a position of a magnetic ring, measuring displacement data and angle data, and transmitting the data to the central processing unit for storage; thirdly, restarting the pulling device, and repeatedly measuring and saving the data until a measuring tube contacts a limit switch; and processing all the data of the central processing unit, and obtaining road foundation vertical settlement and transversal displacement parameters. The automatic monitoring device and the automatic monitoring method apply laser measurement technology, improve the measurement precision and the measurement depth, and simultaneously realize remote automatic monitoring.