Objective To analyze the application effect of psychological nursing based on grounded theory in the prognosis of patients with burn and plastic surgery. Methods A total of 60 patients with burn and plastic surgery in Guizhou Provincial People's Hospital from January 2022 to December 2023 were selected as the research object, and they were divided into control group and observation group by random number table method, with 30 patients in each group. The control group was given routine nursing care, and the observation group was given psychological nursing care based on grounded theory. The post-traumatic stress disorder score, body image disorder score, pain, sleep quality, inflammatory factor level and complication rate were compared between the two groups. Results After intervention, the scores of post-traumatic stress disorder and body image disorder in the observation group were lower than those in the control group (P <0.05). After intervention, the VAS score and PSQI score of the observation group were lower than those of the control group (P <0.05). The levels of IL-6, hs-CRP and TNF-α in the observation group were lower than those in the control group after intervention (P <0.05). The incidence of complications in the observation group was 3.33%, which was lower than 20.00% in the control group (P <0.05). Conclusion The application of psychological nursing based on grounded theory in patients with burn and plastic surgery can improve the degree of post-traumatic stress disorder and body image disorder, relieve the degree of pain, improve the quality of sleep, improve the level of inflammatory factors, and reduce the incidence of complications.