The invention provides a waterstop device and waterstop construction method suitable for large-section rectangular pipe jacking starting. The device comprises a waterstop tank body, a waterstop sock sleeve and a grease filling structure, wherein the waterstop tank body is annularly arranged on the outer edge of a tunnel portal building envelope, and the waterstop sock sleeve and the grease filling structure are each connected to the inner side of the waterstop tank body. The method comprises the steps of manufacturing and providing the pipe jacking waterstop device, mounting the pipe jacking waterstop device by utilizing the waterstop tank body, starting a pipe jacking machine to enable the waterstop device to enter a tunnel portal, and pressing and injecting grease into the outer wall of the pipe jacking machine. According to the waterstop device and waterstop construction method, the problems that in the pipe jacking construction process, the sealing performance is poor, and consequently the water effect fails, and muddy water is leaked outwards are solved, and the pipe jacking construction quality is further improved.