The invention relates to a variable-volume diesel engine based on a worm and gear mechanism and an operating method thereof. The variable-volume diesel engine comprises a cylinder which is provided with an air inlet pipe and an air outlet pipe. Upward-protruding lower tooth blocks are distributed on the top of a piston in the cylinder at intervals. The upper portion of the cylinder is provided with a floating plate capable of moving up and down. Upper tooth blocks penetrating through the top of the cylinder and extending into the cylinder are distributed on the lower side of the floating plateat intervals. The upper tooth blocks and the lower tooth blocks are staggered in position, and when the piston moves upwards, each upper tooth block can be inserted into a lower tooth slot between the corresponding two adjacent lower tooth blocks, and each lower tooth block can be inserted into an upper tooth slot between the corresponding two adjacent upper tooth blocks. According to the variable-volume diesel engine based on the worm and gear mechanism and the operating method thereof, the compression ratio can be controlled and adjusted according to different compression ratios required for various load conditions, the compression ratio of the diesel engine is made to meet the current operating condition most, fuel oil can be fully atomized and burnt under various operating conditions,detonation is avoided, and the optimal fuel economy, dynamic property and discharging effects are achieved.