The invention discloses a roadbed settlement observation device and an observation method thereof, and relates to the road construction technical field. The roadbed settlement observation device includes a settlement water cup, connecting pipes and a measurement system; the bottom of the settlement water cup is fixedly provided with a water inlet pipe, a water outlet pipe and an exhaust pipe; the water inlet pipe is connected with a measuring pipe, the water outlet pipe is connected with a vacuumization device, and the exhaust pipe is connected with outside air; the joint of the connecting pipe and the measurement system is further connected with a water storage barrel through a water storage barrel connecting pipe, the joint is provided with a three-way valve structure for communicating the three pipelines. The observation method includes the stages: a first stage, mounting and laying the system; a second stage, vacuumizing the settlement water cup and the connecting pipes; and the third stage, measuring the liquid level height. After adopting the observation device and the observation method thereof, the device can achieve settlement observation without construction interference during roadbed construction, also can perform long-term observation in a usage period, and is low in construction cost and easy to operate.