The invention relates to a system and a method for drug placement, distribution and source tracing based on digital tags. The system is formed by connecting the following devices in a wired local network and a wireless local network inside a hospital: a drug placement, distribution and source tracing application server connected with a service database, a plurality of drug placing terminals, a single drug distributing terminal, a source tracing management terminal and an HIS (Hospital Information System) interface terminal interacting information with an HIS system. The system is a set of information system for drug placement, distribution and source tracing constructed by adopting a computer technology, an RFID (Radio Frequency Identification Devices) technology and a two-dimensional code technology. The information system is used for supporting hospital staff to complete two operating steps of drug placement in pharmacies and drug distribution in sick rooms during the drug circulation inside the hospital based on the digital tags, providing scientific and visualized examination means and tools and monitoring and checking each key link during drug placement and distribution. The system can realize the safe control mechanism of drugs for treating patients during the circulation inside the hospital and can reduce the accident potential caused by human mistakes.