The invention provides a picture-in-picture display method which comprises the following steps: playing a multi-media file on an electronic picture frame; starting a picture-in-picture display mode; generating a picture-in-picture position; receiving a television program; and displaying the multi-media file and the received television program in the picture-in-picture mode. The invention also provides an electronic picture frame with a picture-in-picture display function. The method and the electronic picture frame can display the multi-media file and the television program in the picture-in-picture mode, thereby a user does not need to ceaselessly switch between an electronic picture frame mode and a television mode, and the electronic picture frame is convenient to operate.