The invention provides an all-optical-fiber current transformer and a current measuring method thereof. The all-optical-fiber current transformer is mainly formed by three parts: a sensing unit, a signal processing unit, and a merging unit. The sensing unit employs the Faraday magneto-optic effect principle and used for inducing current of a measured conductor, and generating light intensity signals carrying data information of the Faraday rotation angle. The signal processing unit mainly completes input of optical singles of the sensing unit, analysis of the output optical signals, digitalization processing, and temperature compensation etc., and performs output according to a prescribed synchronous serial mode. The merging unit completes synchronization, switching or parallel logic of information of the signal processing unit, and transmits the information to an electrical measuring instrument and a relay protection device.