The present invention discloses a device and a method for monitoring two-stage faults of a TDM-PON with high precision. A two-stage TDM-PON system includes an OLT I, a feeder fiber II, a stage-1 1:n optical splitter III, a stage-1 branch fiber IV, a stage-2 1:n optical splitter V, a stage-2 branch fiber VI, and an optical network unit (ONU) VII. A two-stage optical network monitoring system includes a monitoring part on the OLT I side and a monitoring part on the ONU VII side, where the monitoring part on the OLT I side includes a control-end isolator-free semiconductor laser, a control-end coupler, a control-end optical coupling device, a control-end photodetector, an integrated signal acquisition and processing device, and an optical coupling device; and the monitoring part on the ONU VII side is similar to the monitoring part of the OLT I side.