A cash recycling system and a banknote separating device thereof are provided. The banknote separating device includes a supporting side plate, and an impeller wheel assembly, a banknote separating assembly, a first banknote pressing assembly and a second banknote pressing assembly mounted to the supporting side plate. The first banknote pressing assembly includes a first banknote pressing plate and a synchronous belt pulley mechanism configured to drive the first banknote pressing plate, and the synchronous belt pulley mechanism includes two synchronous pulleys and a synchronous belt sleeved on the synchronous pulleys. With the banknote separating device, the structure is simplified, the banknote clamping risk is reduced, and the reliability is improved.