The invention discloses an automatic meter reading system and a communication link quality detecting method thereof. By utilizing the system, a new network layer interface architecture between a power line carrier module and a terminal is provided and through the architecture, an IPV6 (Internet Protocol Version 6) network can be directly accessed. The detecting method comprises a master-slave mode and a slave-master mode. In the master-slave mode, test data packets are sent from a master module, while a slave module at the opposite end receives the test data packets, records the test result and sends the result data to a concentrator; and in the slave-master mode, test data packets are sent from the slave module, while the master module receives the test data packets, records the test result and sends the result to the concentrator. According to the invention, the concentrator drives the master module and the slave module to be in the related link test mode by the control primitive, therefore the on-line detection of the link quality of each node of the master module and the slave module under the control of ICMP (Internet Control Messages Protocol) is realized, and an effective guarantee is supplied for the on-line network quality of an AMI (Advanced Metering Infrastructure) system of a smart power grid.