The invention provides an intelligent distribution transformer system and an application method thereof. The system comprises containers and a controller. The container is arranged on a distribution transformer terminal and is used for: managing and running different types of application services, each type of application service being deployed in one container. The controller comprises a server and a client, wherein the server is arranged in a master station, the client is arranged in the distribution transformer terminal, and the server remotely controls the client and is used for managing the network, the device and containers of the distribution transformer terminal in the distribution transformer system through cooperative operation. The system and the application method adopt the containers to operate and manage different types of application services in the distribution transformer terminal, thereby achieving the isolation of different applications. The application service performs data processing in the power distribution terminal, so that the consumption of communication resources is reduced, and the timeliness of related services is improved. Remote management can be carried out through the controller, and the fault self-diagnosis capability and manageability of the intelligent distribution transformer terminal are improved.