The invention provides a banknote plastic packaging machine and a banknote packaging method. The banknote plastic packaging machine comprises a frame, an upper plastic film frame, a lower plastic film frame, a lifting mechanism, a driving system and a control system, wherein the frame is divided into a plurality of layers of mounting areas from top to bottom by a plurality of baffle plates; a primary plastic package unit is arranged in the mounting area between the upper plastic film frame and the lower plastic film frame and used for conducting primary plastic package on plastic packaged banknotes by a plastic film, and the secondary plastic package unit is parallel to the primary plastic package unit and is used for conducting the secondary plastic package on the plastic packaged banknotes by heat shrinkage films; the lifting mechanism is arranged in front of an L-shaped banknote pushing mechanism and used for conveying the plastic packaged banknotes subjected to secondary plastic package to a heat shrinkage furnace, and the heat shrinkage furnace is arranged below the lifting mechanism and used for conducting heat shrinkage treatment on the plastic packaged banknotes subjected to secondary sealing and cutting. According to the banknote plastic packaging machine, the banknote damaging rate is reduced, the banknote drawing can be avoided, the banknote storage quality is improved, the environment of the banknote storage warehouse is improved, the logistics management of the banknotes is facilitated, the volume of the machine is small, and the degree of automation is high.