A plug-tray seedling automatic transplanting machine and control method thereof, wherein, said machine comprises a chassis bracket, a planting mechanism, seedling separating mechanisms, seedling guiding devices, a power mechanism, a box shifting mechanism, a seedling picking mechanism. The box shifting mechanism is installed on the chassis bracket, the seedling picking mechanism is installed on the box shifting mechanism, and two sets of seedling separating mechanism are symmetrically arranged on both sides of the box shifting mechanism by the chassis bracket, the seedling guiding device is provided above each set of seedling separating mechanism, and the planting mechanism is provided under each set of seedling separating mechanism. With the synergistic effect of various mechanisms and control system, it is possible to pick seedlings in whole row without interval in various sizes of plug-trays, and drop seedlings at the same time, which increase the efficiency and success rate of picking seedlings and dropping seedlings. The plug-tray only needs to move longitudinally, thereby improving the efficiency of the plug-tray transport. The seedling claw can comb the pot seedlings before being inserted into the pot, which improves the quality of seedling picking. The seedling guiding device receives the seedlings statically and shortens the free-falling movement distance, which makes seedling dropping more accurate.