The invention provides a split cooled type transformer and a heat dissipating method thereof. The split cooled type transformer comprises a transformer body located underground, and a heat dissipating device placed on the ground, wherein a connecting pipeline is arranged between the transformer body and the heat dissipating device, and comprises a concentrated oil outlet pipe section for feeding hot oil of the transformer body into the heat dissipating device; a heat insulating layer is arranged on the concentrated oil outlet pipe section of the transformer body. During a process of conveying the hot oil of the transformer body into the heat dissipating device through the concentrated oil outlet pipe section, heat of the hot oil is prevented from dissipating to an underground space out of the concentrated oil outlet pipe section. According to the split cooled type transformer and the heat dissipating method thereof provided by the invention, through reducing the flow resistance during a hot oil natural convection process, the utilization ratio of a transformer cooling section is improved, and the heat dissipating efficiency is further improved.