The invention relates to a cutter-inverted fresh lotus seed shelling machine and an application method thereof. The cutter-inverted fresh lotus seed shelling machine comprises a rack, wherein a hopper for feeding fresh lotus seeds is arranged on the rack; a discharge port is formed on one side below the hopper; the discharge port is connected with a discharge mechanism for grain separation and discharge; an inclined roll groove for conveying fresh lotus seeds is connected below the discharge mechanism; the upper end of the roll groove is connected with the discharge mechanism, and the lower end of the roll groove extends to below a groove wheel; a groove is formed on the periphery of the groove wheel along the circumferential direction; the cutter-inverted fresh lotus seed shelling machine also comprises a cutting mechanism for cutting lotus seeds; the cutting mechanism is arranged below the groove wheel and reversely arranged on a U-shaped rocker arm; and the U-shaped rocker arm is articulated with the rack. The cutter-inverted fresh lotus seed shelling machine has the beneficial effects of simple structure, convenience in operation, low manufacturing cost and low power consumption, is suitable to be popularized to individual farmers and meets wide market needs.