A transport stream processing system capable of recording and playing back a transport stream carrying a plurality of transport stream packets is provided, and includes: a first memory unit storing a plurality of sets of control words; a packet identifier filter acquiring a set of control words according to a packet identifier value of a transport stream packet and configuring an indicator to indicate whether the transport stream packet is for a recording or a playback operation; a second memory unit storing a plurality of data structures, wherein each data structure corresponds to an index number of each set of control words; and a processor determining whether the recording or playback operation for the transport stream packet is performed for the transport stream packet according to the indicator, retrieving a data structure according to the index number corresponding to the acquired set of control words and performing the operation accordingly.