The invention discloses a PSS (power system stabilizer) magnification factor optimization testing method based on low frequency oscillation damping sensitivity and equivalent alternating-current gain. The testing method comprises an equivalent alternating-current gain comparison method testing step and a magnification factor optimization step with the low frequency oscillation damping sensitivity as the target function, wherein the equivalent alternating-current gain comparison method testing step ensures additional torques produced in a PSS link to be equal under different time constants, thereby realizing the comparison of PSS action effects at different phase compensation angles in the condition that the PSS additional torques are same, therefore, how to select or further adjust the magnification factor can be known; a magnification factor optimization method which takes the low frequency oscillation damping sensitivity as the target function calculates the sensitivity of low frequency oscillation damping to the amplification factors according to the damping ratio value obtained in the small step disturbance test for the active power of a generator and the amplification factor set on the scene; and then parameters are adjusted according to the size and variation tendency of the damping ratio.