The invention discloses an embedded instrument code disc character automatic identification system and method. The automatic identification system comprises an embedded microprocessor, an image sensor, a camera module, a TTL-USB to serial port module, a storage module and a power supply module. According to the invention, instrument code disc images under different angles and illumination conditions are adopted through the camera module, and image character areas are positioned and segmented; the obtained single code disc character size is normalized, and image shift processing is performed by using a data enhancement algorithm to obtain a whole character sample set and a double-half character sample set; a lightweight convolutional neural network is constructed, and the whole character sample set and the double-half character sample set are input into the neural network for training in a classified manner; and the trained network model is quantized, the quantized network model is deployed to a machine vision system, a single code disc character region is positioned, classification identification is carried out on single code disc characters in the region, and an identification result is displayed. Water level data monitoring and an image identification technology are combined, automatic identification of instrument characters is achieved, and the identification precision is high.