Disclosed is an image registration and an augmented reality system and an augmented reality method thereof which is suitable for solving the problem of spatial localization of the temporomandibular joint (TMJ) in arthroscopic surgery. The system comprises a three-dimensional scanning model building device, a stereoscopic image photographing device, a projection device and an arithmetic unit. The three-dimensional scanning model was constructed by preoperative or intraoperative imaging of the patient, and the surface three-dimensional model constructed by the stereoscopic image photographing device was spatially aligned to remove the surface (skin layer) of the three-dimensional image to display the TMJ image. Through the calibration of the stereoscopic image photographing device and the projection device, accurate, three-dimensional TMJ image location information is projected onto the patient's body to achieve the purpose.