It is very important to know well the health status of power grid operation in time and accurately. The concept of power system health diagnosis and evaluation is introduced in this paper. Health condition assessment of power system through the analytic hierarchy process (AHP) - entropy method and fuzzy theory. This paper constructs the index system of power system health diagnosis in terms of the historical basis, real-time operation and environment influence, in which fault indicator item is added to improve the original index system and make the evaluation more objective, accurate and persuasive. Its gap and changing trend are found by diagnostic analysis of the system through the diagnostic data and the suggestions on the anomalies are given out. The effectiveness and feasibility of the diagnostic method is verified by analyzing certain real power grid in southwest of China.