The invention discloses a recognition and processing method of bad data of dissolved gas in transformer oil. The bad data mainly comprises dead data and abnormal jump data; the recognition and processing method of the bad data comprises the following steps: (a) recognizing and processing the dead data; (b) recognizing the abnormal jump data, wherein a condition set for data jump is that the change of single-point data is large, the data after jump is returned to a normal level, and the calculation of the data jump is mainly to confirm a data change amplitude threshold value; the processing of the abnormal jump data is to perform filtering processing on a gas concentration value based on a wavelet denoising principle in signal processing, and comprises the following steps: (1) selecting a wavelet and determining decomposition levels, and then performing wavelet decomposition calculation on a signal; (2) selecting a proper threshold value for a high-frequency coefficient under each decomposition size to perform soft threshold value quantitative treatment; (3) denoising by using a wavelet multi-size decomposition denoising principle aiming at the jump data, namely noise-containing data.