The invention discloses a tunnel precast lining joint and a construction method thereof. Precast lining segments are symmetrically arranged on the two sides of a pipe seam, grooves are reserved in extrados ribs of the precast lining segments, the two adjacent precast lining segments are connected, the adjacent reserved grooves form a water stop groove, and connecting rod holes are formed in soffits of the precast lining segments. In construction, by adopting a high-pressure jetting mode, a traditional method using jacks for jacking is replaced, the construction efficiency is improved, operation is simplified, and meanwhile the firmness of connection of the adjacent precast lining segments is more stable. A lining formed through connection can prevent the deformation of surrounding rock with counterforce, ensure the stability of tunnel walls and prevent water stored in the surrounding rock from entering a tunnel. The tunnel precast lining can meet the requirements for limiting the deformation of lining segments and transmitting shear stress.