The invention discloses a reactive damping controller based on a flexible excitation system and a parameter setting method. The controller is composed of a double-channel signal input end, an acceleration power signal synthesis link, a phase shift gain and output amplitude limiting link and a control signal output end. The parameter setting method comprises the following steps of setting the parameters of the acceleration power signal synthesis link; establishing a theoretical uncompensated characteristic mathematical model of a reactive damping channel of a flexible excitation system; and establishing a reactive damping controller compensation characteristic mathematical model, solving an optimal solution of the control parameters of a phase shift link of a reactive damping controller byusing an intelligent optimization algorithm, solving a critical gain by using a root locus method, and finally setting the gain of the reactive damping controller according to a damping calculation formula. The controller can replace a power system stabilizer to provide damping for a full frequency band of low-frequency oscillation, and can also independently design a damping strengthening strategy for a specific frequency band by utilizing the advantage of channel independence, so that the full-effect suppression effect of excitation control on the multi-mode low-frequency oscillation of a power system is improved.