The grounding grid is critical to the safety and stability of a power system. Corrosive cracking of the grounding conductor is the main cause of deterioration of grounding grid performance. Existing fault diagnosis methods for grounding grids are limited by the number and distribution of grounding leads, and some of them cannot be used for online detection. This paper proposes a grounding grid detection method based on magnetic source excitation. The measuring device consists of four coils, two horizontal excitation coils, and two vertical receiving coils. The secondary magnetic field signal is extracted from the primary field and the background field by properly positioning the coils, such that the measured signal can reflect the underground media more accurately. The measuring device of the method is portable, the measurement process is contactless with the grounding grid, and it is not limited by the grounding leads. Furthermore, it has a strong anti-interference ability and can realize online detection. It was proven by simulations and experiments that the proposed method has a higher measurement accuracy and stronger anti-interference ability when compared with existing methods. This paper also discusses the influence of various factors such as the number and the location of the breakpoints, the frequency of the excitation source, the soil resistivity, and stratification from the measurement data. It was proven that the method has high precision and a wide application range, and is important for guiding significance and reference value in engineering applications.