A pixel unit of TFT-LCD array substrate and a manufacturing method thereof is disclosed. In the manufacturing method, besides a first insulating layer and a passivation layer, a second insulating layer is adopted to cover the gate island, and forms an opening on the gate island to expose the channel region, the source region and the drain region of the TFT. A gray tone mask and a photoresist lifting-off process are utilized to perform patterning, so that the TFT-LCD array substrate can be achieved with just three masks.