The invention discloses on-line purification equipment for a metal machining fluid and a purification method thereof. The equipment comprises a purification fluid tank, a stock solution tank, a magnetic separation pool, a magnetic slag tank, a drum type multi-stage magnetic separation device, a gas-liquid mixing pump, an ozone generator, an ozone copolymerization air-float sterilization separationdevice and a Y-shaped water outlet pipe, wherein the drum type multi-stage magnetic separation device adopts a drum-shaped structure, the inner wall of the drum is embedded with a plurality of same permanent magnets at certain intervals along the same axial direction; and the inside of the ozone copolymerization air-float sterilization separation device is orderly provided with a grid, a baffle plate and an ozone contact generator from bottom to top, and the upper part of the ozone contact generator is a separation zone. The method comprises the main steps of magnetic separation, gas dissolution, sterilization and water and slag discharge. The method has the advantages of realizing the on-line circular purification and use of the machining fluid, prolonging the service life of the machining fluid, greatly reducing the amount of waste fluid generated and achieving the aims of water conservation, emission reduction and clean production.