A transformer fault diagnosis method and system using induced ordered weighted evidence reasoning is provided. The method includes the following steps. A typical data sample of transformer sweep frequency response analysis is loaded and a diagnostic label is set as an identification framework. Test data of a device to be diagnosed is loaded. Basic probability assignment is calculated and a reliability decision matrix is constructed. An induced ordered weighted averaging operator and its induction vector are calculated according to a sample source of the data. An index weight vector is calculated. All evidence is fused by the induced ordered weighted evidence theory and reliability of comprehensive evaluation is calculated, so as to determine a diagnosis result. The disclosure realizes fault identification, fault type distinction and fault position of power equipment by interpreting detection waveforms.