The invention provides an electric grid state estimation system and method based on a boundary fusion. The system includes an electric grid data acquisition module, a communication module including a local data unit and a state estimation unit, and a data fusion module, wherein the state estimation unit includes a memory storing a state estimation program and a display displaying a program running and outputting a state variable; the state estimation program is performed to realize an electric grid state estimation; the estimation method includes the following steps of dividing a regional electric grid, then establishing a measurement equation for each region, solving an internal quantity and a boundary quantity, fusing the boundary quantities of two regions, correcting the boundary quantity, performing a non-linear transformation on the intermediate variable, solving the estimated values of the state variable by the least square method, and performing outputting.