The invention relates to a portable steel rail abrasion and contour shape detection device and a detection method thereof. The portable steel rail abrasion and contour shape detection device comprisesa support, a reference piece, multiple displacement meters and a data acquisition memory. During detection, the portable steel rail abrasion and contour shape detection device is held by hands to begradually close to a steel rail, the rail surface, the outer side surface and the inner side surface of the steel rail are enabled to extend into an accommodating space of the support from an inlet ofthe support, the reference piece is enabled to be attached to the outer side surface of the steel rail, one ends of the displacement meters are ensured to be in elastic contact with the rail surfaceand/or the inner side surface of the steel rail, the portable steel rail abrasion and contour shape detection device is moved in the extension direction of the steel rail for detection, and detectiondata which are stored by the data acquisition memory are obtained; and due to the facts that the portable steel rail abrasion and contour shape detection device is moved in the extension direction ofthe steel rail during detection and the multiple displacement meters are provided and are arranged adjacent and/or opposite to the reference piece, the multiple displacement meters can be used for detecting the abrasion condition of the rail surface and/or the inner side surface of the steel rail in a continuous multi-point mode and also can be used for detecting the three-dimensional contour shape change of the steel rail.