An apparatus and method for automatically switching the operation mode of a switching circuit in a portable terminal are provided. If an external device is connected to a connector interface unit, a signal is detected from the connector interface unit. The type of external device is identified by the detected signal. If the identified external device is a communication device, a communication mode is activated and a signal path is established between an internal module and the external device during the communication mode. A determination is made as to whether an internal event occurs in the portable terminal and an external event occurs in the external device, during the communication mode. The mode of the connector switching circuit is switched to a sleep mode if the internal and external events have not occurred.