The invention discloses an insulation system with polycrystalline anti-cracking and waterproofing mortar, which belongs to the technical field of the building material. The insulation system comprises interface mortar, insulation mortar and waterproofing mortar, wherein the waterproofing mortar comprises the following components: cement, sand, redispersable latex powder, hydroxypropyl-methyl cellulose ether, inorganic water reducing agent, organosilicon waterproofing agent, sodium silicate and inorganic retarder. Compared with the prior art, the invention has the following advantages of: 1, solving the problem that the bonding strength of the inorganic cementitious material for penetration is not sufficient, and significantly improving the bonding strength and the compressive strength of the whole insulation system; 2, improving the construction property of the material and the insulation effect of the system; 3, improving the construction property and enhancing the long-term strength of the product; 4, improving the waterproofing function of the system, and changing the rigidity of various kinds of polycrystalline mortar into softness, thereby improving the impact resistance, bending resistance, tensile strength, shrinkage resistance and other strain capacities of the insulation system; and 5. improving the bending resistance and the tensile strength of the material and the physical anti-cracking performance of the system.