A method for detecting an insulation damage location in a reflux rail of a subway/coal mine and a transition resistance thereof includes the following steps: connecting a reflux rail to a negative electrode of a substation, selecting a location at a connecting point as a reference location, and mounting a potential detection apparatus at the reference location; mounting a travel distance detection apparatus and a traction current detection apparatus on a locomotive, traveling, by the locomotive, to the substation along the reflux rail, where the three detection apparatuses send respectively recorded data to a control unit; and determining, by the control unit, a potential jump from received potential data and a corresponding jump time, and determining a running distance of the locomotive at a jump moment and a total running length of the locomotive, so as to determine a ground insulation damage location.