The invention discloses a drilling direction positioning device and an application method thereof. The drilling direction positioning device comprise a bass, a foundation seat, and a positioning rod; a circular dial is installed on the upper end surface of the base; scales are formed in the circumferential surface of the circular dial; the foundation seat is movably connected with the upper end surface of the circular dial through a vertical rotation shaft; the foundation seat is of hemisphere shape; a semicircular slot is formed along the radius plane where the central axis of the foundation seat is located; the positioning rod is arranged in the semicircular slot in a flexible connection mode through a horizontal rotation shaft; scales are formed along the outer circumferential surface of the semicircular slot; a position limiting component I is installed on the base to limit the movement of the base; a position limiting component II is installed on the foundation seat to limit the movement of the position rod; and a fixing part used for fixing arrangement is installed on the lower end surface of the base. Compared with the prior art, the drilling direction positioning device has the beneficial effects that errors of azimuth angles can be corrected and changed at any time; operation errors and system errors of the drilling direction positioning can be removed to some extent; and the accuracy of drilling results is enhanced.