The invention relates to a dense medium rapid settling and sludge filtering water treatment system and method. A water collecting tunnel is arranged in a mine tunnel water channel, a first liquid level meter monitors the liquid level of waste water in the water collecting tunnel and transmits liquid level data to a controller, and when judging that the liquid level of the waste water exceeds a threshold value, the controller controls a lifting pump, agent adding equipment and dense medium circulating water treatment equipment to be started and operate; the lifting pump pumps the water in the water collecting tunnel into the dense medium circulating water treatment equipment arranged in a mine; the agent adding equipment adds a water purifying agent into the waste water in the dense medium circulating water treatment equipment; the dense medium circulating water treatment equipment carries out circulating treatment on the water pumped therein, sludge in the treated water is discharged into a sludge tank, and the treated purified water is discharged into an underground sump. The dense medium rapid settling and sludge filtering water treatment system is arranged under the mine and completes waste water treatment under the mine, energy saving and environment protection are achieved, and operating cost is lowered.