The invention discloses an on-line monitoring and fault diagnosis system for traction-transformer-station traction return currents and grounding state. Traction-return-current all path current transformers are connected with a traction-return-current system collecting device; an electrical-equipment-grounding-down-conductor voltage transformer is connected with a grounding-down-conductor data collecting device, a grounding-grid upper-portion-earth-surface-potential reference electrode is connected with a reference-electrode data collecting device, and a soil data collecting device measures a grounding-network-buried-area earth resistivity; a traction-return-current distribution database stores traction-transformer-station traction-return-current all-path real-time currents; an electrical-equipment-grounding-down-conductor potential distribution database stores electrical-equipment-grounding-down-conductor real-time potential; a grounding-grid upper-portion-earth-surface-potential distribution database stores grounding-grid upper-portion-earth-surface real-time potential; an on-line state identifying device outputs the assessment result of the traction return currents and the grounding performance. According to the on-line monitoring and fault diagnosis system for the traction-transformer-station traction return currents and grounding state, on-line assessment of the traction-transformer-station traction return currents and grounding state is achieved, and rapid early warning and accurate positioning of the abnormal state and the fault state are achieved.