The present invention relates to the field of power systems, in particular to a dispatching-controlled distribution network neutral point grounding device and a control method thereof, the device comprises an arc suppression coil, a bypass switch and a resistor, one end of the arc suppression coil is connected with a neutral point of a transformer and the other end is connected to the ground, oneend of the bypass switch is connected with the arc suppression coil and the other end is connected with a resistor, one end of the resistor is connected with the bypass switch and the other end is connected to the ground. The invention has the beneficial effects that when a single-phase permanent grounding fault occurs in the distribution network, the fault does not directly cause the circuit breaker of the line to trip immediately, and the power supply reliability is improved; The trip time is controlled manually by the dispatcher, and the user has a certain preparation time to prepare the blackout plan before trip, which is easy for the user to accept. Because the system is grounded by arc suppression coil in normal operation mode, if the grounding signal does not return for a long time,it must be a permanent grounding fault. After switching to the large current grounding mode, the circuit breaker on the fault line does not need to be reclosed after tripping.