The present invention discloses a simulation method and system for a merging unit and intelligent terminal integration device of a distribution substation. The system comprises three modules: a merging unit and intelligent terminal integration device configuration information extraction module, which acquires virtual terminal information of a to-be-inspected spacing layer device and information of an associated process layer device by analyzing an SCD file; a merging unit and intelligent terminal integration device simulation module, which analyzes configuration information of the extracted process layer information, and based on an embedded real-time platform, realizes simulation of the merging unit and intelligent terminal integration device; and a test information interaction operating module, which controls the merging unit and intelligent terminal integration device simulation device to simulate process layer communication, sends a preset normal or abnormal process layer communication message, and realizes a function test on the spacing layer device of a distribution substation. The method and system provided by the present invention meets the demand of performing a fast test on the spacing layer device of the distribution substation, and greatly improves maintenance efficiency of the secondary system of the substation and the automation level of jobs.