The invention discloses a circulating system and a method for continuous downhole cooling of high-temperature drilling fluid. The circulating system includes a cooling water tank, a cooling water injection pump, a plurality of U-shaped pipes, a liquid nitrogen cooling tank, a spiral pipe, a cooling water return pump and a return pipeline. The U-shaped pipe is fixed in an unsealed bond cement gap between outer and inner casings, and two ends are respectively connected with output end of the cooling water injection pump and the spiral pipe. The spiral pipe is disposed in the liquid nitrogen cooling tank; input and output ends of the cooling water return pump are respectively connected with the spiral pipe and the return pipeline; one end of the return pipeline is disposed in the cooling water tank; input end of the cooling water injection pump is connected with the cooling water tank by a pipe.