The present invention discloses an arc extinguishing hybrid transfer switch, including a mechanical switch and a first thyristor branch connected in parallel with the first contact branch of the mechanical switch, wherein the first thyristor branch includes a first thyristor, a second thyristor, a first polarized capacitor and a second polarized capacitor, the first thyristor and the first polarized capacitor are connected in series in the same direction, the second thyristor and the second polarized capacitor are connected in series in the same direction, and a branch consisted of the first thyristor and the first polarized capacitor and a branch consisted of the second thyristor and the second polarized capacitor are connected in parallel in reverse direction. The invention further discloses a switching method for the arc extinguishing hybrid transfer switch for implementing an arc extinguishing of a mechanical switch. In the invention, a low-power thyristor may be used, thus the cost of the switch may be lowered greatly. Moreover, the thyristor may be replaced by the polarized capacitor for implementing the arc extinguishing when a short-circuit failure occurs on the thyristor. Thus, the load current is lowered greatly and the influence of thyristor failure on the load is reduced.