The invention provides a digital substation automation method and a system. The method comprises the step of receiving running data information of a power distribution network inside an area. The running data information is sent by a power distribution network area manager. The area is one having one or more feed lines in the power distribution network. The method further comprises the steps of monitoring the running state of the power distribution network inside the area according to the data information, generating corresponding control commands and sending the commands to the corresponding power distribution network area manager; and positioning and isolating faults inside the area through the power distribution network area manager and further resuming power supplies to areas with no faults. The substation can make areas with faults isolated through the power distribution network area manager. The substation achieves local isolation of faults inside the power distribution network. Problems that the power distribution network and the substation run in an unreliable way are further prevented.