The present invention relates to an apparatus and a method of automatically converting thermal displacement compensation parameters of a machine tool, which automatically convert a compensation parameter of a thermal displacement compensation equation of a machine tool so that the compensation parameter is optimized to a current thermal displacement state of the machine tool in real time based on Z-directional or Y-directional displacement data of a tool tip end of a reference tool measured by a tool measuring unit according to an operation state of the machine tool or various kinds of machine tools or thermal displacement data of the machine tool calculated by measuring a processed portion of a processed material, and temperature data measured by a temperature measuring unit, to minimize a processing error according to thermal displacement and improve processing accuracy of the machine tool.