The invention relates to a multifunctional hydraulic packaging machine and a packaging method thereof. The packaging machine comprises a machine body frame, a safety protection door, a compression bin, a compression bin door, a door clamping device, a hinge, a water receiving groove, a package turning check block, a protection cover, a hydraulic system, an electric control system, a guide rod, an extrusion plate, a package turning system, a dustbin and a compression platform; the water receiving groove and the compression bin are arranged on the lower portion of the machine body frame, the package turning system is arranged at the bottom of the compression bin, the compression bin door and the safety protection door are hinged to the machine body frame through the hinge, an inclined panel is hinged to the opening position of the lower portion of the compression bin through the hinge, the compression bin door and the machine body frame are locked through the door clamping device, and the safety protection door and the machine body frame are locked through the door clamping device; and the multifunctional hydraulic packaging machine and the packaging method have the beneficial effects that design is simple and ingenious, the structure is reasonable and compact, use is convenient, the structure is diversified, one machine has multiple purposes, and the compression problem of different types of materials in the actual production life is solved.