The invention provides an automatic change-over switch adopting a three-stable state permanent magnetic operating mechanism, and a method of automatically changing over a power supply. The automatic change-over switch adopting the three-stable state permanent magnetic operating mechanism comprises the permanent magnetic operating mechanism, a first switch and a second switch, wherein the first switch and the second switch are connected with two ends of the permanent magnetic operating mechanism. A movable iron core has a first, a second and a third working positions. The method of automatically changing over the power supply comprises the steps: not electrifying all driving coils, and enabling the movable iron core to be stably located at the second working position. The automatic change-over switch appliance with one power supply end or another power supply closed (disconnected) can be realized by adopting the permanent magnetic operating mechanism, the mechanical tripping and latching system of the traditional automatic change-over switch can be omitted, no additional electrical interlocking device is needed, and the automatic change-over switch is retained at a switching-off or switching-on position through retentivity produced by a permanent magnet.