A liquid explosive for in-situ explosive fracturing in low-permeability oilfields and application thereof are provided. The liquid explosive includes raw materials in parts by mass: a main explosive with positive oxygen balance, a guest regulator and isolation microcapsules; the main explosive with the positive oxygen balance includes raw materials in parts by mass: monomethylamine nitrate, ammonium nitrate, sodium nitrate, water, guar gum, sodium nitrite, a high-temperature resistant regulator with a low detonation velocity and a surfactant; the guest regulator includes raw materials in parts by mass: a reducing agent and a density regulator; the isolation microcapsules include raw materials in parts by mass: porous hollow microbeads, a pore plugging agent and wall materials of pressure-resistant microcapsules; the guest regulator exists in the porous hollow microbeads of the isolation microcapsules.