A method and device for detecting insulation degradation of a power module, which detects, in advance, degradation of an insulating sheet based on a current change immediately before breakdown of an insulation characteristic from a current value of a current flowing through the insulating sheet, thereby detecting a failure of a power module caused by the degradation of insulation. The device includes: a current detector sampling and detecting a current value of a current flowing through an insulating sheet of the power module at a predetermined time interval; a calculator determining, based on the current value, a state in which the insulation characteristic of the insulating sheet is so degraded that the breakdown is imminent, and outputting a degradation determination result of YES when it is determined that the insulating sheet is in the state immediately before the breakdown; a current storage storing a current value i(n−1) at a previous sampling time point; and an alarm generating an alarm in response to the degradation determination result of YES. The calculator outputs the degradation determination result of YES when a present current value in exceeds ten times the previous current value i(n−1).