The invention relates to a lightning arrester grounding indicator and a lightning arrester grounding indication method, belonging to the technical field of electric power system inspection. The technical scheme is that: detecting the intensity and the time of duration of the magnetic field induction current of a lightning arrester grounding lead wire through a current inductor; and capturing a current which is greater than 0.5 mA and locking the current; determining the current through the time of duration, wherein if the time of duration of the induction current is less than 50 microseconds, the current is a lightning current and alarming is not required; and if the time of duration of the induction current is greater than 4 microseconds, the current is a grounding current and display alarm is performed and the position is determined as a fault point. The lightning arrester grounding indicator and the lightning arrester grounding indication method have the advantages that as the internal part of the lightning arrester is brokendown so that the circuit is grounded and the electric power system is tripped, the lightning arrester grounding indicator can accurately display alarm at the grounding point so that an inspection staff can visually discover and the hard inspection work becomes simple and easy and the lightning arrester grounding point becomes visual so that a foundation is laid for quick recovery of power transmission.