The invention provides a thermal life monitoring system for a paper oil insulation transformer. The thermal life monitoring system comprises an alarming temperature controller provided with multiple external optical fibers connected with an optical fiber sensor sequentially through a guide groove and a penetrating device. The penetrating device is sleeved with a combination board with a hole formed in the middle. A hole is formed in the wall of a transformer oil tank, the combination board is welded to the hole in the wall of the transformer oil tank, and the optical fiber sensor penetrates through the combination board and the hole in the wall of the transformer oil tank to be installed at the assembly hottest point of a transformer simulation calculation coil. The alarming temperature controller is externally connected with a power source and further externally connected with a computer through RS-232 communication. The invention further relates to a thermal life monitoring method for the paper oil insulation transformer, wherein the system is adopted in the method. Loads and hotspots of the transformer can be tracked and monitored for a long time, in combination with a sampling paperboard detection result in a hotspot region, the method can be combined with other test methods to be used jointly and can be independently used, the thermal aging state of the transformer is monitored and analyzed, and meanwhile long-term operation safety, reliability and economical property of the transformer are guaranteed.