The invention discloses a hydraulic cylinder piston displacement detection device and method. The device comprises a synchronous belt wheel, a speed reducer and an angular displacement sensor, wherein the synchronous belt wheel is provided with a synchronous belt, one end of the synchronous belt is connected with a piston rod in a hydraulic cylinder, and the other end of the synchronous belt is connected with a balance weight; the synchronous belt wheel is connected with the input end of the speed reducer through a center shaft of its own, and the angular displacement sensor is connected to the output end of the speed reducer. The synchronous belt wheel is driven by the synchronous belt, the balance weight is used for balancing, and linear displacement is converted into angular displacement; the rotating speed of the synchronous belt wheel decelerated by the speed reducer is detected through the angular displacement sensor, and then precise measurement of the linear displacement of a piston is achieved; when the balance weight is replaced with a hydraulic pump/motor-energy accumulator system, displacement detection of the piston when a hydraulic cylinder is installed and used at any position can be achieved.